Criminal tax prosecutions and convictions overwhelmingly concern the general offence of tax fraud and the laundering of its proceeds. Yet it is difficult to discern any coherent approach to punishment. On the contrary, the overlapping interventions of legislators and courts perpetuate confusion: sometimes these offences follow a common regime, to the point of becoming interchangeable, while at other times they receive different treatment on uncertain grounds. In either case, this situation may prejudice those subject to the law.
1 – Regarded as undermining the principle of a « common contribution » and infringing one of the « foundations » of the republican compact [1], tax fraud has attracted sustained administrative, governmental, parliamentary and constitutional attention for nearly thirty years.
Often understood as conduct rather than as a specific offence, which already raises a legal issue, it is defined through the lens of its suppression. Thus, « combating tax fraud » and, more recently, « combating tax avoidance » have been elevated to the status of an « objective of constitutional value » deriving from Article 13 of the Declaration of the Rights of Man and of the Citizen of 1789 [2]. That objective justifies, in particular, the coexistence of administrative and criminal regimes « pursuing common aims, both deterrent and punitive » [3] , which together « protect the State’s financial interests and ensure equality before taxation » [4].
The multifaceted concept of fraudulent conduct evolves with public policy priorities and the conduct of dishonest taxpayers, or those regarded as such. Most recently, at the Prime Minister’s request, the Court of Auditors sought to « assess the current state and scale of tax fraud by proposing an estimate using a methodology that could be reproduced in future to monitor the phenomenon over time » [5]. In doing so, the Court undertook a relatively detailed classification exercise, seeking to define and distinguish tax planning, tax avoidance, tax irregularities and the tax gap. Noting the « overlap » between some of these categories, it ultimately adopted the generic term « fraud » [6].
This inherent lack of precision could only create difficulties as its criminal dimension expanded.
Two issues are already familiar to readers and will therefore be mentioned only briefly.
First, the prosecution and punishment of tax fraud, understood strictly as the conduct defined and penalised by Article 1741 of the General Tax Code (CGI), have undergone significant successive changes both to the level of potential penalties and to the procedures for initiating criminal proceedings. The stated constant has been a determination to criminalise fraudulent conduct and increase the severity of sanctions [7].
Second, criminal law abhors a vacuum, and a criminal regime based on laundering the proceeds of tax fraud has gradually developed, sometimes as an alternative and sometimes as a complement. It has experienced varying fortunes since its initial recognition in the Paneurolife judgment of 2003 [8]. Since excellent recent overviews have addressed the subject [9], it is enough to recall that this parallel development stems, at least as a practical matter, in particular from the ability to circumvent the « Bercy lock » [10], use more extensive investigative powers and, ultimately, impose harsher sanctions or sanctions unavailable for tax fraud itself [11]. Although criticised [12], this practice, including some of its most inventive aspects, has largely met with approval from the Criminal Chamber of the Court of Cassation, which has recognised both the autonomous nature of this offence dependent on a predicate offence [13] and the concept of self-laundering [14].
Was the legislature aware of this dichotomy when making certain recent amendments to criminal law? Did it seek to remedy it or, conversely, to affirm the coexistence of these two offences? It is difficult to answer those questions from the enacted provisions alone.
Two examples illustrate the resulting ambivalence.
First, alongside the many debates over abolishing the Bercy lock, the preparation of the Act of 23 October 2018 involved another, less prominent confrontation. It arose from the Senate’s proposal, recommended by its Law Committee and Finance Committee, to place on a statutory footing the prosecutor’s ability to prosecute laundering of the proceeds of tax fraud without complying with Article L.228 of the Tax Procedures Code (LPF) [15]. Codifying the ruling in Talmon was indeed among the recommendations of the joint fact-finding mission on procedures for prosecuting tax offences [16]. Yet the government tabled an amendment to remove that provision. Through the Minister for Public Action and Accounts, it observed, in particular, that the law in this respect was not « fully clarified » and that the Talmon case law « may present difficulties of intelligibility », while stating in the same intervention, without fear of contradiction, that « the advantage of such a provision appears quite limited, given that the case law is clear and unequivocal » [17]. The Law Committee’s rapporteur, opposing its removal, replied that the aim was to « secure proceedings brought on this basis, which could be challenged at any time if the case law changed » [18]. The Senate rejected the deletion amendment. Matters proceeded very differently in the National Assembly, where the Finance Committee’s rapporteur, who had also served as rapporteur for the fact-finding mission proposing the amendment, stated that « during the rapporteur’s hearings in preparation for examining this bill, Ministry of Justice representatives argued that codification carried risks. An interpretation a contrario might create uncertainty about whether the “Bercy lock” applies to other ordinary offences with a tax-related subject matter, such as offences involving handling criminal proceeds, fraud or criminal association. Following the principle that “the best is the enemy of the good”, the Director-General for Criminal Affairs and Pardons recommended retaining the Talmon case law, which he regards as sound, rather than codifying it ». That argument is debatable, since the same bill significantly curtailed the scope of the lock. Nevertheless, after a short debate that did not change the positions expressed, the corresponding provision was removed from the bill and consequently from the Act as adopted and promulgated.
Does this mean that tax fraud merits a statutory framework « set in stone », to borrow a parliamentarian’s expression, while laundering its proceeds will remain subject to the uncertainties of case law? As will be seen, this is no marginal issue, since the relationship between the new tax fraud prosecution regime and that governing money laundering raises several questions.
A second example illustrates this ambiguity equally clearly. It concerns the debates over including first laundering of tax fraud proceeds and then tax fraud itself among the offences eligible for a judicial public interest agreement (« CJIP »). The extension of the CJIP, originally conceived as a tool reserved for legal entities facing investigations into corruption and related offences, arose from a revised amendment tabled by a parliamentarian who had also originated the CJIP itself. It proposed extending the scheme to « ordinary or aggravated laundering of the proceeds of offences under Articles 1741 and 1743 of the General Tax Code ». The aim was « also to include laundering of the proceeds of all offences covered by this procedure, aggravated money laundering and laundering of tax fraud proceeds; the tax administration, rather than the courts, has direct jurisdiction over tax fraud, but it frequently and fortunately happens that an investigating judge takes up a tax fraud case on the basis of money laundering » [19]. The tone was set: money laundering provided the gateway for circumventing the Bercy lock; by permitting a CJIP on that basis, the legislature merely also opened an exit… Considering this extension, the Senate thought it appropriate to add the following clarification: « for laundering of the proceeds of offences under Articles 1741 and 1743 of the General Tax Code, and for related offences, excluding those under Articles 1741 and 1743 themselves ». The rapporteur explained that this was « to ensure that offences related to laundering of tax fraud proceeds could be taken into account in such a settlement procedure, in the interests of consistent judicial treatment, while excluding recourse to that procedure for tax fraud itself, given its specific sanctions regime, which includes administrative sanctions » [20]. Although the very possibility of a CJIP prompted vigorous parliamentary debate, its extension to laundering of tax fraud proceeds and then to related offences, and the debatable reasons for excluding tax fraud itself, attracted no particular discussion. The provision was adopted unchanged in the « Sapin II » Act of 9 December 2016.
During the discussions leading to the Act of 23 October 2018, the bill as initially tabled contained no CJIP provision. It proposed only including tax fraud among the offences eligible for the prior admission of guilt procedure (« CRPC »). The extension to the CJIP arose from an amendment which the rapporteur commented on briefly as follows: « Already permitted for laundering of tax fraud proceeds, recourse to the CJIP procedure is thus extended to tax fraud itself, to provide prosecutors, within the government’s criminal policy framework, with another means of dealing promptly with certain cases » [21]. During the Senate debates, the Minister for Public Action and Accounts opposed the extension, observing in particular that: « The further extension to tax fraud has two consequences. First, it allows the lock to be circumvented, since it is a form of judicial settlement that does not constitute a prosecution. Second, without a conviction, criminal punishment may lose its distinctive character, since it would resemble settlement by the tax administration. It could therefore be paradoxical to seek to enable the judicial authorities to take up tax fraud cases only to treat them similarly to the Administration » [22]. The rapporteur, however, observed that « it would be rather paradoxical to provide this possibility for laundering of tax fraud proceeds, which is effectively a somewhat related offence, but not permit it for tax fraud itself », and the provision was adopted unchanged. The Assembly’s Law Committee noted both that the extension had been proposed by the fact-finding mission on procedures for prosecuting tax offences and that it had been advocated by the Financial Public Prosecutor. At her hearing, she had argued that extending the CJIP to tax fraud could suit certain cases and that, in any event, the prosecution’s range of tools needed to expand if the Bercy lock was modified. The committee discussion nevertheless produced a particularly heated debate [23], during which the government, through the same minister, curiously defended the extension. The provision was finally enacted in the Act of 23 October 2018.
These two examples reflect what, for want of a better expression, the authors call a hesitant waltz, almost literally: uncertainty about which foot to lead with when considering tax fraud and laundering of its proceeds together.
Sometimes, laundering of tax fraud proceeds seems almost excluded from the broader thinking on reforming criminal tax fraud prosecutions and confined to judicial definitions. In itself, that position is not devoid of legal rigour: laundering of tax fraud proceeds is merely one form of money laundering among others, and could, or should, follow Articles 324-1 et seq. of the Criminal Code without exception [24]. The difficulty nevertheless lies in the diverse and evolving case law on the subject, illustrated by the series of Criminal Chamber judgments delivered on 11 September 2019 [25].
At other times, the position is quite different: the legislature treats laundering of tax fraud proceeds not only as an autonomous offence, but as deserving its own regime and sometimes even paving the way for innovation in tax fraud law. To repeat the Law Committee rapporteur’s argument quoted above, what could be more reasonable than legislating for tax fraud as has already been done for laundering its proceeds? This too readily overlooks the different origins of the two offences, one a minor offence attracting limited punishment and enforcement, the other an offence within the sphere of organised crime, meaning that aligning their regimes is not self-evident. Nevertheless, many recent provisions envisage their coexistence. The Act of 15 September 2017 on confidence in political life made the additional penalty of disqualification from elected office mandatory for anyone convicted of aggravated tax fraud, tax fraud committed by an organised group, or laundering the proceeds of that offence (Criminal Code, Art. 131-26-2). The same applies to numerous organisational provisions, for example concerning investigative services such as the National Brigade for the Suppression of Tax Crime (« BNRDF »), whose jurisdiction was extended to laundering of tax fraud proceeds by the Act of 6 December 2013 [26]. It also applies to the more recent Financial Judicial Investigation Service (« SEJF »), established by the Act of 23 October 2018. Both services include judicial tax officers (Code of Criminal Procedure, Art. 28-2) tasked with investigating and establishing « offences under Articles 1741 and 1743 of the General Tax Code and laundering of the proceeds of those offences ».
This hesitant waltz has consequences. Without claiming to be exhaustive, this study examines several situations representative of the difficulties arising at the stages of classifying the alleged conduct (1), punishing it (2), and compensating the harm claimed by the State or Administration (3). At each stage, established rulings, albeit sometimes debatable, coexist with situations in which even an informed person cannot anticipate the judicial treatment of the alleged conduct.
1. Unpredictability in the prosecution of fraudulent conduct
2 – The difficulties identified arise at the classification stage and persist in procedural treatment.
A. – Cumulative or interchangeable offence classifications?
3 – The « general offence » of tax fraud, to use terminology employed in particular by the tax administration, is distinctive in that the very broad wording of the various forms of its material element and its aggravating circumstances inevitably encompasses numerous other forms of fraudulent conduct, without any constitutional challenge on that basis having yet been upheld [27].
That wording nevertheless permits an impressive, perhaps unparalleled, number of cumulative offence classifications.
First, such accumulation derives from the provision defining the offence, which states that it applies « without prejudice to the specific provisions set out in this Code ». This frequently concerns Article 1743 of the same Code, also called the « accounting offence », or, to our knowledge much more rarely, other offences under that Code [28].
It also derives from case law permitting cumulative classification with « source » offences, preparatory offences, « parallel » offences and offences dependent on a predicate offence, including money laundering [29].
Combined with complicity, these possibilities permit numerous distinct classifications whose selection, although legally sound, reflects a form of procedural and punitive opportunism [30].
The difficulty, already present with other offences, becomes particularly acute when tax fraud intersects with laundering of its proceeds, to the point that classifications which can be applied cumulatively become effectively interchangeable:
- as regards the aggravating circumstances of tax fraud, which directly echo certain material elements of money laundering, for example opening bank accounts abroad or interposing natural or legal persons, bodies, trusts or comparable institutions established abroad;
- as regards complicity in tax fraud, which facilitates it through aid, assistance or instigation [31] and also constitutes « assistance in an operation involving placement, concealment or conversion of the direct or indirect proceeds » of tax fraud… namely money laundering.
Why hope for legislative intervention? Undoubtedly because the judicial authorities show little receptiveness to the concerns of those subject to the law or practitioners in this respect. The parliamentarians quoted above welcomed this: some investigating judges see it as a tool with a perfectly sound legal basis.
Might there be a constitutional issue here, along the lines of the Council’s decision in the Assoc. Emmaüs Forbach case [32] ? In that decision, concerning conduct identically classified by law but attracting very different penalties depending on the offence provision chosen by prosecutors, with corresponding differences in procedure and the consequences of conviction, the Council held that this difference in treatment « is not justified by any difference in circumstances directly related to the purpose of the legislation; given its nature and magnitude, the difference in potential penalties infringes the principle of equality before criminal law ». So far, no lower court has considered it appropriate to refer a priority preliminary question of constitutionality (QPC) to the Criminal Chamber on this basis. A criminal court recently found such a question insufficiently serious, holding that « First, the constituent elements of money laundering and complicity in tax fraud differ and do not protect the same interests. Second, the prosecution exercises its discretion to prosecute freely and independently » [33]. This somewhat categorical position is hardly reassuring to a person exposed to interchangeable offence classifications… Even if the question eventually passes a trial court’s screening, the path to the Constitutional Council remains fraught with obstacles, as the Criminal Chamber currently appears unwilling to reconsider the autonomous nature of money laundering, which it has already forcefully affirmed [34].
B. – Uncertain procedural rules favouring money laundering?
4 – Will the substantial growth of the general money laundering offence, which has « become over the years the principal criminal law tool for combating tax fraud » [35] , be checked by implementation of the new Article L. 228 of the LPF, requiring the tax administration automatically to report the most serious tax cases [36] ? Presented as ending the Bercy lock, will it also remove the practical rationale that some regard as the source of many money laundering prosecutions? There is reason to doubt this, principally because certain provisions of the Act of 23 October 2018 appear, intentionally or otherwise, capable of maintaining or even enhancing the comparative appeal of money laundering to prosecutors.
First, the Bercy lock has not truly disappeared: as a matter of legislative drafting, the reporting regime is merely an exception to the rule still stated in Article L. 228, II of the LPF, the first paragraph being enacted « without prejudice to complaints initiated by [the Administration] » [37]. Situations will therefore remain in which, because of the tax administration’s interpretation, a prosecutor may consider it justified to overcome the absence of a complaint through money laundering charges, for example where a case did not attract penalties triggering mandatory reporting but reached the prosecutor through another channel, such as a third-party complaint.
Second, imprecise or incomplete legislative intervention may disturb the previously established limitation regime for tax fraud, favouring the rules developed for money laundering. Article L. 230 of the LPF, applicable to criminal prosecutions for offences defined in the preceding provisions, states that « complaints may be lodged until the end of the sixth year following the year in which the offence was committed ». This does not merely mirror the ordinary limitation period: it is a special period introduced by the Act of 6 December 2013, « this extension concern[ing] only the initial period within which the complaint must be lodged and the prosecutor must perform the first act interrupting limitation » [38]. Time runs from the filing of the return or, where none is filed, the expiry of the statutory filing deadline [39]. This provision posed no difficulty when tax fraud followed a single prosecution regime. However, because the legislature omitted to amend it when changing that regime, the limitation rules governing reports, if distinct from those governing lodged « complaints », remain uncertain.
It could be considered necessary, as matters stand, to refer to Articles 8 and 9-1 of the Code of Criminal Procedure, which establish the ordinary six-year limitation period for non-felony criminal offences. This reframes the question of when limitation begins to run for tax fraud. Although the ordinary starting point, the date of the offence, generally coincides with that mentioned above for tax fraud, postponement because the conduct is clandestine or concealed under Article 9-1 could significantly affect the balance of the limitation regime. One of the material elements of tax fraud is precisely concealment of taxable sums. Could concealment lead a prosecutor to contemplate postponing the starting point until the « day on which the offence emerged and could be established in circumstances permitting criminal proceedings to be initiated or pursued », subject to the ultimate 12-year limit (Code of Criminal Procedure, Art. 9-1)?
Conversely, Article L. 228, I of the LPF provides that the « application of surcharges » capable of triggering a report is assessed « at the collection stage » [40]. If collection begins more than six years after a starting point that cannot be postponed, would the reported tax fraud not be time-barred?
Finally, the newly created Article L. 228 C of the LPF allows the prosecution to pursue criminal proceedings without a fresh complaint or report from the tax administration where it discovers « tax fraud concerning the same taxpayer and involving other taxes or a different period ». If that period is earlier, what happens to conduct committed more than six years before the complaint or report and the first investigative act concerning it?
These uncertainties might lead prosecutors seeking to avoid limitation difficulties to prefer laundering of tax fraud proceeds, which under current case law may appear considerably more accommodating in limitation terms. By affirming that the general money laundering offence is an instantaneous offence, the Criminal Chamber of the Court of Cassation has undoubtedly provided welcome clarification of its limitation regime [41]. Since the offence is completed at a single point in time, limitation runs from the date of the prohibited act. This does not exclude a series of indivisible acts causing time to run from the last act. The starting point may also be postponed where the clandestine or concealed nature of the conduct prevented criminal proceedings [42]. Finally, although it is established that expiry of the limitation period for the predicate offence does not prevent prosecution of the autonomous money laundering offence [43], the Criminal Chamber also appears to consider that limitation cannot begin to run for the latter before the predicate offence emerges in circumstances permitting criminal proceedings [44].
Third, the presumptions developed to assist the prosecution in proving guilt have different scopes depending on whether the charge is tax fraud or laundering its proceeds.
For tax fraud, the only existing presumption is the « presumption of liability of the de jure executive », to borrow the BOFiP’s enthusiastic terminology [45]. It derives solely from case law [46]and may be rebutted, in particular, by producing a valid delegation of powers and demonstrating that the executive genuinely ceased exercising the delegated powers.
Money laundering benefits from a statutory presumption under Article 324-1-1 of the Criminal Code: « property or income is presumed to be the direct or indirect proceeds of a serious or other criminal offence where the material, legal or financial circumstances of the placement, concealment or conversion operation can have no justification other than concealing the origin or beneficial owner of that property or income ». Once the prosecution establishes the opaque nature of the operations and the failure to identify the source of the income or property, this provision requires the defendant to prove its lawful origin. The Criminal Chamber has also held that, where this presumption applies, « the criminal court need not identify, still less establish the constituent elements of, the serious or other criminal offence that generated the proceeds subjected to placement, concealment or conversion » [47].
Some authors have observed that the evidentiary framework for money laundering now appears to depend both on the type of laundering and on whether the predicate offence is identified [48] :
- where proceedings are based on paragraph 1 of Article 324-1 of the Criminal Code, proof of a connection between the property or income of the perpetrator of a serious criminal offence and the direct or indirect profit from the other criminal offence is not required. The criminal origin of the laundered property or income may therefore be regarded as subject to a rebuttable presumption [49] ;
- where proceedings are based on the second paragraph, it appears that, when the offence is identified, the burden of proving a predicate offence is to some extent « reduced ». It is immaterial whether its precise circumstances are established, whether the original offence was prosecuted, or whether the predicate offence occurred within national territory [50] , provided that the conduct prosecuted abroad can correspond to conduct criminally punishable in our legal system [51]. The Criminal Chamber recently recalled that the existence of a predicate offence must nevertheless be established and that, for laundering of tax fraud proceeds, lower courts cannot merely refer to « failure to declare the funds to customs authorities when transferring them » [52].
Where the prosecution does not identify the predicate offence, the presumption in Article 324-1-1 relieves it of that burden. It must nevertheless prove concealment of the origin or beneficial owner of the property or income. The Court of Cassation’s first interpretation of this concept was very broad: it held that such concealment was established by the mere failure to declare to customs cash held by a motorist [53].
Finally, an element should be mentioned that, unusually, does not originate with the legislature but results from the combined action of the Constitutional Council and the courts. When examining the constitutionality of cumulative administrative and criminal sanctions for tax fraud, the Council formulated several reservations, observing in particular that « the contested provisions of Article 1741 [of the CGI] cannot, without infringing the principle of necessity of offences, permit a taxpayer relieved of tax by a final judicial decision on substantive grounds to be convicted of tax fraud ». Did this offer an opportunity to avoid criminal punishment, at least while the tax litigation remained pending? That hope was short-lived: in its commentary on the decision, the Council’s legal service specified that it did not prevent « the initiation of both sets of proceedings », a position immediately followed by criminal courts hearing stay applications. Apparently concerned to temper taxpayers’ enthusiasm, the legal service also stated that the reservation did not benefit a taxpayer relieved of tax on procedural grounds, but merely ensured that no criminal sanction was imposed « in the absence of tax evaded » [54]. The Criminal Chamber adopted an equally restrictive approach, inviting lower courts to examine the reasons for the decision relieving the taxpayer of tax to ensure that « failure to comply with the filing obligation » had genuinely been called into question. For example, a taxpayer found not liable because a sale price had been incorrectly categorised was not to be regarded as relieved of tax on substantive grounds [55]. This criterion is nevertheless debatable since, as some authors have noted [56], relief on procedural grounds does not mean that the taxpayer could not have obtained relief on substantive grounds: « a court reviewing the legality of an administrative act is not, in principle, required, when granting an application for annulment, to rule on grounds other than the one it expressly upholds » [57]. This reservation is relevant to the present study because the Criminal Chamber recently modified its case law on systematically refusing stays, observing that « Even where a defendant charged with tax fraud establishes pending proceedings before the tax court seeking relief on substantive grounds, the criminal court need not stay its decision until a final tax court decision is delivered. Exceptionally, in the exercise of its unfettered discretion, it may grant a stay where there is a serious risk of conflicting decisions, particularly where a non-final decision has relieved the defendant of tax on substantive grounds. In all cases, a court hearing a stay application must give specific reasons for its decision » [58]. A person uncertain of their criminal fate may see this as progress, although still dependent on the trial court’s discretion. Someone prosecuted for laundering of tax fraud proceeds is not expressly covered: the Chamber carefully refers to a « defendant charged with tax fraud ». Will it extend its recent generosity to that person, or repeatedly invoke the autonomous nature of laundering so as to deny the constitutional reservations whose scope it has already strictly confined?
2. Unpredictability in the punishment of fraudulent conduct
5 – The difficulty concerns principal sentences, additional penalties and other « measures of a criminal nature » alike.
A. – Variable principal sentences?
6 – The sanctions regime for tax fraud and money laundering has been significantly complicated by the successive, combined and evolving interventions of the legislature, the Constitutional Council and the courts, making it difficult to determine, in absolute terms, which offence is now punished more severely.
For laundering of tax fraud proceeds, the principal penalties for natural persons are five years’ imprisonment and a fine of 375 000 euros, increased to ten years and 750 000 euros for aggravated money laundering. The offence’s appeal in financial terms also lay in the possibility of increasing the fine to half the value of the property or funds involved in the laundering operations. A particularly severe interpretation exposed legal entities convicted of laundering tax fraud proceeds to a fine equivalent to two and a half times, or five times one half of, the amount fraudulently withheld from taxation by the original offenders. Nevertheless, almost contrary to its stance on certain innovations by prosecuting and trial authorities in this area, the Criminal Chamber, in one of its judgments of 11 September 2019 [59], held that the sums regarded as laundered for calculating the fine cannot correspond to the taxable base fraudulently withheld from taxation, but only to the tax evaded. This welcome clarification nevertheless illustrates the difficulty of treating laundering of tax fraud proceeds as an autonomous offence: subject to the general definition applicable to all laundering, a person remains at the mercy of judicial interpretation capable of significantly altering the potential fine.
For tax fraud, successive reforms have ultimately increased the principal penalties for natural persons to five years’ imprisonment and a fine of 500 000 euros, an amount that may shortly change [60]. These penalties increase to seven years and 3 000 000 euros where an aggravating circumstance is established. Somewhat ambiguously, custodial terms therefore remain lower than or equal to those for money laundering, while the corresponding fines are now substantially higher. The most significant innovation of the Act of 23 October 2018 is an alternative fine based on a multiplier: the fine may now reach twice the « proceeds derived from the offence », or even, following the parliamentary debates, ten times those proceeds, assuming the multiplier is subject to Article 131-38 of the Criminal Code [61]. This provision has generated two uncertainties that remain unresolved.
The first concerns the definition of « proceeds derived from the offence ». This wording, identical to and inspired by that used for offences against probity [62], is regrettable for an offence which, unlike money laundering, did not require such generality. In the absence of firm confirmation, the proceeds should be considered to correspond to the tax evaded, which would be consistent with the Criminal Chamber’s interpretation of laundered funds in tax fraud laundering cases.
The second concerns application of a multiplier increasing a legal entity’s profit tenfold. When commenting on the newly enacted law, the authors expressed reservations about a provision not examined by the Conseil d’État, not reviewed by the Constitutional Council and intended by parliamentarians for « exceptional » cases, although that limitation does not appear in the legislation [63]. Nearly two years later, the uncertainty remains: persons prosecuted for conduct after the Act’s entry into force will therefore be the first to challenge it if a prosecutor chooses to apply this « exceptional » provision.
One final peculiarity in determining the fine potentially imposed on a tax fraud offender must be mentioned.
As is well known, under the Constitutional Council’s traditional reservation, where tax and criminal proceedings may lead to cumulative sanctions, proportionality requires the total amount of sanctions imposed never to exceed the highest amount of any one potential sanction. For tax fraud, these sanctions comprise administrative penalties, excluding late-payment interest, and the fine under Article 1741 of the CGI.
The Act of 23 October 2018 also restored an administrative power removed by Act No. 2013-1117 of 6 December 2013: the ability to settle the amount of penalties even where initiating criminal proceedings is contemplated. This is not merely a return to the status quo ante, since the initiation rules have themselves evolved, leading the legislature to the more complex rule now in Article L. 228:
« The application of surcharges is assessed at the collection stage. However, where a settlement is concluded before collection, their application is assessed by reference to the latest financial consequences notified to the taxpayer under the procedures in Articles L. 57 and L. 76 of the [LPF] ».
In other words, if the surcharge, or penalty, contemplated before settlement, at the proposed reassessment or ex officio assessment stage, originally exceeded the threshold triggering mandatory reporting to the public prosecutor but fell below it through settlement, the Administration must nevertheless report the case. The taxpayer would thus suffer the adverse effects of a penalty never actually imposed. Conversely, if the reported case led to criminal proceedings, would the maximum potential fine, where the maximum criminal fine exceeds the surcharges imposed, not be determined by reference to the amount actually imposed rather than theoretically applicable? In practice, this would deprive the administrative settlement of any useful effect, since the amount « saved » would remain payable as a potential criminal fine.
B. – Inconsistent additional penalties?
7 – Examining the additional penalties and measures of a criminal nature provided for by the two offences reveals, at the very least, a lack of consistency between their sanctions regimes. Again, in the absence of considered legislative intervention, the severity of these penalties and their governing rules most often derives from judicial interpretation, whose punitive rationale is not always intelligible.
Consider first Article 1745 of the CGI, under which anyone finally convicted under Articles 1741, 1742 or 1743, as principal, co-perpetrator or accomplice, may be held jointly and severally liable with the statutory taxpayer for the evaded tax and related penalties. In practice, the trial court imposes this joint and several tax liability at the request of the tax administration as civil party. Its nature requires a concept specific to it, since it resembles no other existing mechanism [64]. Identified by the Criminal Chamber as an « additional sanction » [65] and consistently as a « measure of a criminal nature », it nevertheless does not constitute, under that Chamber’s own case law, a « penalty » [66] or a sanction « of a punitive nature » [67].
The Court of Cassation thus acknowledges that the mechanism is detrimental to the person against whom it is ordered, yet refuses to recognise any punitive character, even though it can be ordered only in criminal proceedings and « such an order may be made only as part of the criminal prosecution, which belongs exclusively to the public prosecutor » [68]. The only certainty is its purpose, recently reaffirmed by the Court: joint and several tax liability constitutes « security for recovery of the Public Treasury’s claim » [69] , giving « the person who has paid the evaded taxes and related penalties […] a right of recourse against the principal debtor and, where appropriate, the other joint and several debtors » [70]. Ultimately, this measure would constitute a form of statutory personal security ordered by the criminal court for the tax administration’s benefit [71].
Above all, this sui generis measure substantially infringes the prosecuted person’s rights by effectively excluding the fundamental safeguards applicable both to civil compensatory measures [72] and to criminal sanctions. This is reflected, in particular, in the absence of any requirement to give reasons for imposing it [73], the inapplicability of the principles of necessity and proportionality of penalties [74], and the inability to challenge its imposition in addition to a criminal conviction under ne bis in idem [75]. Nor does the Constitutional Council’s reservation limiting the combined amount of tax penalties and criminal fines apply to it [76].
Unchanged since 1979, this curious mechanism sometimes becomes central to an opportunistic strategy far removed from the original legislature’s intentions. Where the taxpayer cannot or will not pay the reassessed tax, the prosecution, where the conduct permits, has every incentive to prefer complicity in tax fraud over laundering of its proceeds for an implicated third party. Once finally convicted, that accomplice, perhaps more solvent than the taxpayer, can pay the entire tax debt in the taxpayer’s place without, as noted, invoking the prohibition on cumulative sanctions. At least the accomplice avoids what might be called « double » accumulation: application both of the criminal sanction and Article 1745 of the CGI and of the newly created Article 1740 A bis, which establishes an administrative fine potentially imposed on « intermediary advisers » but excludes it where they face criminal prosecution for complicity under Article 1742 of that Code.
The development of additional penalties for tax fraud and money laundering appears consistent with the broader pattern observed in this study:
- for tax fraud, the legislature continues creating new measures, with the Act of 23 October 2018 introducing mandatory deprivation of civic, civil and family rights, and public posting and dissemination of the sentence, unless the court gives specific reasons otherwise. A very recent bill proposes another additional penalty for natural persons: disqualification from benefiting from any tax credit or tax deduction scheme for income tax payments [77] ;
- for money laundering, without legislative amendment, case law defines the scope of the very severe ordinary provisions applicable.
The various forms of the additional penalty of confiscation deserve mention. For both money laundering and tax fraud, it is available by operation of law for the instrument of the offence, its direct or indirect proceeds, and movable or immovable property of any kind belonging to the convicted person or freely at their disposal where they cannot explain its origin. For tax fraud, confiscable proceeds correspond to the « estimated savings achieved through the fraud » [78]. In this context, the criminal court need not examine the measure’s proportionality [79] but must satisfy itself « that indications exist giving rise to a presumption that the offences were committed » [80]. It must in all cases specify « the nature and origin of the property and the basis of the measure » [81]. The principal difference between the regimes is the possibility, for laundering of tax fraud proceeds (Criminal Code, Art. 324-7, para. 12, also applicable to legal entities under Art. 324-9), of confiscating all or part of the convicted person’s assets, a particularly drastic economic penalty. Although this has been a genuine sword of Damocles over suspected launderers, particularly through special seizures during proceedings under Articles 706-141 et seq. of the Code of Criminal Procedure to secure such a sentence, the Criminal Chamber has sought to clarify and temper the regime. It has held that such a seizure must be justified under the principles of necessity and proportionality of penalties [82], a requirement likewise applicable when imposing the penalty [83].
C. – Differing regimes for cooperating offenders
8 – Although a « cooperating offender » regime exists for both tax fraud (CGI, Art. 1741, para. 12) [84] and money laundering (Criminal Code, Art. 324-6-1), its operation differs, even though both provisions were introduced by the same 2013 Act [85].
First, unlike a cooperating money launderer, a cooperating tax offender cannot obtain full exemption from punishment by preventing commission of the offence. This is hardly surprising, given that laundering depends on a predicate offence: no special regime is needed for a predicate offender who prevents the offence, since this amounts to voluntary withdrawal under Article 121-5 of the Criminal Code and cannot be punished.
Second, although both cooperating tax offenders and money launderers may obtain a reduction by half of the potential custodial sentence, the conditions differ. For tax fraud, the regime may benefit persons who alert the judicial or administrative authorities and enable identification of other perpetrators or accomplices. For laundering, the same conditions apply, but the benefit is also available where the perpetrators or accomplices are not identified if the offender has brought the offence to an end.
The parliamentary materials relating to these provisions do not explain the differences. The distinction probably derives from the earlier conception of money laundering as a continuing offence [86]. As noted above, however, the Criminal Chamber has clarified that laundering is an instantaneous offence completed at a single point in time [87]. The continuing relevance of this provision may therefore be questioned, at least in terms of the legal certainty needed for an offender to choose cooperation on an informed basis.
3. Compensation for the harm alleged by the State in its various forms
9 – Having already faced judicial uncertainty over classification, prosecution and punishment of tax fraud and/or laundering its proceeds, the person concerned ultimately encounters the State’s compensation claims, in circumstances that are intriguing precisely because they appear to depart from ordinary law.
A. – Who is the victim?
10 – The applicable rule is theoretically clear. It rests on the distinction between the State’s Judicial Agent and the tax administration, embodied by the DGFiP.
Article 38 of Act No. 55-366 of 3 April 1955 provides: « Any action before the ordinary courts seeking a declaration that the State is a creditor or debtor for reasons unrelated to taxation or State property must, unless otherwise provided by law, be brought by or against the State’s Judicial Agent, on pain of nullity ».
By exception, Article L.232 of the LPF provides: « Where a judicial investigation is opened on a complaint by the tax administration concerning duties, taxes, charges or levies of any kind referred to in the General Tax Code, that administration may join as a civil party ». Notably, the wording does not provide for civil-party participation in the newly introduced situation of an administrative report.
Civil claims in tax fraud cases should therefore fall to the DGFiP, while the State’s Judicial Agent retains the ability to act in other matters, particularly prosecutions for laundering of tax fraud proceeds.
In practice, this is not the position.
First, the tax administration has considerably extended its avenues for civil-party participation in criminal proceedings « on behalf of the French State », joining in ordinary criminal cases, notably VAT fraud [88]. Addressing the issue, the Criminal Chamber developed the concept of an action indirectly connected with recovery of tax claims to permit such participation, for example in VAT fraud cases [89].
Second, particularly in cases involving laundering of tax fraud proceeds, a practice has developed of involving the « French State » directly, in addition to or instead of the tax administration or the State’s Judicial Agent. Numerous judicial decisions and CJIPs thus identify the « French State » as civil party or victim, sometimes itself represented by the DGFiP or one of its officials.
These considerations are not insignificant. Neither the tax administration nor the French State is an ordinary civil party. When participating in criminal proceedings, they may play a practical, legal and symbolic role quite different from that to which the State’s Judicial Agent should theoretically be confined.
The tax administration exercises, in one judge’s words, « an action of a particular nature, midway between a civil action and a criminal prosecution […] It may thereby provide any documents or information useful to the criminal court, respond to the arguments of persons prosecuted and, more generally, enjoy all the rights granted to a civil party by the Code of Criminal Procedure. Its role resembles that of a party supporting the prosecution » [90].
As for the French State, what truly is its position in a criminal trial before judges exercising their functions « in the name of the French people » and prosecutors acting under the direction and supervision of their hierarchy and the authority of the Minister of Justice? This question is particularly delicate when the State seeks, and often obtains, considerable compensation on grounds that are, to say the least, debatable.
B. – Nature and amount of compensation awarded
11 – The previously clear position has been disturbed by the State’s claims and their treatment in case law.
For tax fraud, it is settled that the tax administration as civil party cannot seek, « for harm caused to the Public Treasury by the fraud, compensation distinct from that provided by tax surcharges and fines » [91]. Nor may it seek compensation for distinct harm, since « the specific nature of its action, which is neither a civil action nor a criminal prosecution, derives not from Articles 2 and 3 of the Code of Criminal Procedure but from Article L. 232 of the LPF. Unlike an ordinary civil action, this action does not permit compensation distinct from that provided by tax surcharges and fines, but enables it to follow the proceedings and participate in the hearing » [92].
In practice, the tax administration’s civil-party action therefore consists in supporting the prosecution and requesting application of Article 1745 of the CGI where it considers this appropriate.
Matters are very different where the tax administration and/or French State intervenes in laundering of tax fraud proceeds cases. In an appeal examining whether compensable harm could exist in that context, the Investigating Chamber of the Paris Court of Appeal held, in wording that has since enjoyed particular success, without any intended financial pun, that the State could claim « exceptional financial losses, given the continuing, longstanding and substantial nature of the fraud, necessarily requiring the State to institute procedures to assert its rights and recover its claims, independently of the economic harm represented by the absence of tax revenue due ». The Criminal Chamber upheld this position in a 2014 judgment [93]. On this still unchallenged basis, the French State has recently claimed and obtained amounts that appear not only to be assessed on a lump-sum basis but also proportionate to the criminal financial stakes of the cases, notably the criminal fines imposed [94].
This is particularly problematic because the Criminal Chamber’s scrutiny appears limited to the aforementioned rule that the tax administration cannot claim damages corresponding to evaded tax.
An appeal was therefore brought against a judgment ordering a natural person, also convicted of tax fraud and money laundering, to pay the French State 100 000 euros for « harm resulting not only from the income generated and capital assets escaping the wealth tax base, but also, given the longstanding nature of the facts and the scale of the fraud, from the numerous procedures instituted to recover its claims, particularly during a period of substantial budget deficits ».
The ground of appeal argued:
- that harm resulting from an offence must be compensated in full, without loss or profit to either party; by awarding 100 000 euros for « economic harm represented by the absence of tax revenue due » or « resulting from the income generated and capital assets escaping the wealth tax base », harm already compensated through surcharges and late-payment interest, the court had infringed the principle of full compensation;
- that under Article 2 of the Code of Criminal Procedure, a civil action for compensation for harm caused by an offence belongs only to those personally suffering harm directly caused by it; the financial harm suffered by the State « in asserting its rights and recovering its claims » « during a period of substantial national budget deficits » does not fall within that provision;
- that by awarding the State 100 000 euros in damages for instituting numerous procedures to assert its rights and recover its claims, when each court must assess the unrecoverable legal expenses incurred before it and the convicted person had already been ordered to pay an amount under Article 475-1 of the Code of Criminal Procedure in these proceedings, the Court of Appeal had exceeded its powers.
After noting in passing, without criticism, that « the contested judgment states that the State’s civil-party participation is admissible for harm directly resulting from the fraudulent conduct constituted by the laundering », the Criminal Chamber held that « in ruling on reasons that do not enable the Court of Cassation to ascertain whether the judges included harm arising from tax fraud in the compensation, the Court of Appeal failed to justify its decision » [95].
Did the Criminal Chamber intend to criticise only the relatively novel phrase used by the Court of Appeal, « resulting not only from the income generated and capital assets escaping the wealth tax base », or to reconsider the rest of the formulation, apparently established since 2014 and now underpinning all the French State’s compensation claims? Even if the latter, the criticism appears limited to the possibility that compensation includes evaded tax in some form. It is regrettable, however, that the Chamber, perhaps because it quashed the judgment, did not consider the other appeal arguments: it seems curious that « instituting procedures » or needing to « assert one’s rights » could give any party, even the State, a right to lump-sum compensation outside Article 475-1 of the Code of Criminal Procedure, apparently proportionate to the financial stakes of the case.
This study ends on that final uncertainty. Numerous recent interventions by the legislature and the highest courts have not yet resolved, and may even have aggravated, the difficulties facing those subject to the law, who may still be reported in respect of time-barred or settled matters, tried as launderers although accomplices, likely subjected to seizures and perhaps ordered to pay sums which, although all payable to the Public Treasury, remain difficult to determine and justify in both amount and nature.
Footnotes
1 –
Ministry of the Economy and Finance, Combating Fraud and Strengthening Tax Compliance – 2019 Review: Press Kit, 17 February 2020, p. 3.
2 –
See, in particular, Constitutional Council, 29 December 1999, No. 99-424 DC, Finance Act for 2000, para. 52 and 53 : Rec. Cons. const. 1999, p. 156 ; RJF 2/2000, No. 248, article J. Maïa, p. 99 ; AJDA 2000, p. 37, case note by J.-E. Schoettl ; RJC 1999, I, p. 871. – Constitutional Council, 27 December 2001, No. 2001-457 DC, para. 6 : Dr. fisc. 2002, No. 8, 7, study L. Philip ; RJF 3/2002, No. 315. – Constitutional Council, 29 December 2003, No. 2003-489 DC, para. 10 : JO 31 December 2003 ; Dr. fisc. 2004, No. 17, study 20, L. Philip; RJF 2004, No. 284; LPA 24 and 25 February 2004, Nos. 39 and 40, case note by J.-E. Schoettl. – Constitutional Council, 23 July 2010, No. 2010-16 QPC, Mr Philippe E: Dr. fisc. 2010, No. 35, news item 321 ; RJF 11/2010, No. 1072. – Constitutional Council, 26 November 2010, No. 2010-70 QPC, Pierre-Yves M : JurisData No. 2010-030835 ; Dr. fisc. 2011, No. 6, commentary 209, case note by F. Dieu ; RJF 2/2011, No. 210 ; Gaz. Pal. 2011, No. 58, p. 18, case note by E. Glaser.
3 –
Constitutional Council, 24 June 2016, No. 2016-545 QPC, Alec W and others and 2016-546 QPC, Jérôme C, para. 20: JurisData No. 2016-012236 and JurisData No. 2016-012237 ; Dr. fisc. 2016, No. 27, commentary 405, case note by S. Detraz ; Dr. fisc. 2016, No. 30-35, article 439, R. Salomon. – See N. Jacquot and P. Mispelon, QPC on Cumulative Criminal and Tax Sanctions: A Decision Without Serious Consequences?: Dr. fisc. 2016, No. 26, news item 409. – M. Pelletier, Some Unexpected Consequences of the Alec W and Jérôme C Decisions: Dr. fisc. 2016, No. 30-35, news item 466.
4 –
Ibid.
5 –
Court of Auditors Report, Fraud Affecting Compulsory Levies, Communication to the Prime Minister, Summary, November 2019, p. 5.
6 –
Ibid., pp. 35 to 45.
7 –
See, for example, on this point, G. Pellegrin and Y. Rutschmann, Prosecution and Punishment of Tax Fraud: Developments in Criminal Exposure under the Act of 23 October 2018 on Combating Tax Fraud: Dr. fisc. 2019, No. 11, study 197. – N. Vergnet, Tax Fraud: Towards Greater Criminalisation of Tax Law?: CDE 2020, dossier 1. – or, for earlier studies, C. Cassan, The End of the Bercy Lock: Towards Criminalisation of Tax Law?: EFL, 2018. – D. Gutmann, The « Criminalisation » of Tax Law: Myth or Reality?: Dr. fisc. 2011, No. 4, study, 27.
8 –
Court of Cassation, Criminal Chamber, 2 April 2003, No. 03-80.151, Paneurolife : JurisData No. 2003-019345.
9 –
See, in particular, F. Deboissy, Laundering of Tax Fraud Proceeds: After the Flow, the Ebb?: Dr. fisc. 2019, No. 11, study 198.
10 –
Mechanism provided for byArticle L. 228 of the LPF which, in its version preceding Act No. 2018-898 of 23 October 2018, required a complaint by the tax administration, with the Tax Offences Commission’s approval, as a prerequisite to any prosecution for tax fraud.
11 –
See, for example, on this point, the preparatory materials for Act No. 2012-354 of 14 March 2012, the Amending Finance Act for 2012, National Assembly Report No. 4339, 8 February 2012, p. 175, G. Carrez : « The current fines have not been updated since 1977, making them particularly unsuitable for combating the most substantial frauds ».
12 –
See, for example, S. Goguel-Nyegaard, Laundering of Tax Fraud Proceeds: Troubling Shifts in Enforcement: AJ pénal 2016, p. 186. – B. Quentin, The Bercy Lock: Laundering of Tax Fraud Proceeds and Misuse: JCP G 2018, doctrinal article 719. – A. Lévy, A Practical Perspective on the Anti-Money Laundering Framework: CDE 2017, dossier 21.
13 –
Court of Cassation, Criminal Chamber, 20 February 2008, No. 07-82.977, Talmon : JurisData No. 2008-043263 ; Bull. crim., No. 43 ; JCP G 2008, I, 146, case note by J.-H. Robert ; Dr. pén. 2008, commentary 67, commentary by M. Véron ; JCP G 2008, II, 10103 ; JCP E 2008, 1861, case notes by J. Lasserre Capdeville ; D. 2008, p. 1585, case note by C. Cutajar ; AJ pénal 2008, p. 234, commentary by A. Darsonville ; D. 2009, p. 123, commentary by T. Garé.
14 –
Already accepted in the judgment in Talmon, the concept of « self-laundering » also appears to be recognised by Directive (EU) 2018/1673 of the European Parliament and of the Council of 23 October 2018 on combating money laundering by criminal law, in Article 3, § 5.
15 –
The bill proposed adding toArticle L. 228 of the LPF a paragraph stating that « Prosecution of the offence of laundering of tax fraud proceeds is not subject to the provisions of this Article ».
16 –
National Assembly Report No. 982, 23 May 2018, XVth parliamentary term, by É. Diard and É. Cariou, available at http://www.assemblee-nationale.fr/dyn/15/rapports/micporinfi/l15b0982_rapport-information#.
17 –
Official Record of Senate Debates, sitting of 3 July 2018, available at https ://www.senat.fr/seances/s201807/s20180703/s20180703027.html#section3925.
18 –
Idem.
19 –
National Assembly Report No. 3785, Law Committee, 26 May 2016, available at http://www.assemblee-nationale.fr/14/rapports/r4045.asp#P815_194250.
20 –
Senate Report No. 79, 26 October 2016, available at http://www.senat.fr/rap/l16-079-1/l16-079-14.html#toc24.
21 –
Senate Report No. 602, 27 June 2018, available at https ://www.senat.fr/rap/l17-602/l17-602.html.
22 –
Record of the debates available at https ://www.senat.fr/seances/s201807/s20180703/s20180703020.html#section2702.
23 –
Available at http://www.assemblee-nationale.fr/dyn/15/rapports/cion_fin/l15b1212_rapport-fond#_Toc256000246.
24 –
In support of its refusal to refer a priority preliminary question of constitutionality concerning the possibility of prosecuting laundering of tax fraud proceeds without complying withArticle L. 228 of the LPF, the Criminal Chamber considered the question insufficiently serious because « proceedings for the general, distinct and autonomous money laundering offence follow the same procedures irrespective of the predicate offence », Court of Cassation, Criminal Chamber, 25 March 2015, No. 14-85.251 : JurisData No. 2015-006329 ; Dr. pén. 2015, article 8, commentary by S. Détraz.
25 –
See the explanatory note concerning Court of Cassation, Criminal Chamber, 11 September 2019, No. 18-81.980, FS.P+B+R+I : JurisData No. 2019-015445 ; Dr. fisc. 2019, No. 38, news item 402. – Court of Cassation, Criminal Chamber, 11 September 2019, No. 18-81.067, P+B+R+I : JurisData No. 2019-015446 ; Dr. fisc. 2019, No. 38, news item 401 ; Dr. pén. 2019, commentary 193, case note by V. Peltier. – Court of Cassation, Criminal Chamber, 11 September 2019, No. 18-82.430, P+B+R+I : JurisData No. 2019-015450 ; Dr. fisc. 2019, No. 38, news item 400 ; Dr. pén. 2019, commentary 187, case note by J.-H. Robert ; Dr. pén. 2019, commentary 193, case note by V. Peltier. – Court of Cassation, Criminal Chamber, 11 September 2019, No. 18-81.040, P+B+R+I : JurisData No. 2019-015451 ; Dr. fisc. 2019, No. 40, commentary 390, case note by F. Le Mentec. – Court of Cassation, Criminal Chamber, 11 September 2019, No. 18-84.144, P+B+R+I : JurisData No. 2019-015453 ; Dr. fisc. 2019, No. 38, news item 401. – See M. Stoclet, The Court of Cassation Clarifies Cumulative Tax and Criminal Sanctions for Tax Fraud: Dr. fisc. 2019, No. 40, commentary 420. – N. Jacquot and N. Guilland, Towards Fragmentation of Tax Litigation?: Dr. fisc. 2019, No. 43, study 412.
26 –
Amendment ofArticle 28-2 of the Code of Criminal Procedure byArticle 7 of Act No. 2013-1117 of 6 December 2013 on combating tax fraud and serious economic and financial crime (Dr. fisc. 2013, No. 51, commentary 571).
27 –
In support of its refusal to refer priority preliminary questions of constitutionality on this issue, the Criminal Chamber recalled that « the provisions of the General Tax Code, considered separately or applied together, were declared constitutional, subject to three interpretative reservations, in the reasons and operative parts of decisions No. 2016-545 and No. 2016-546 QPC of 24 June 2016 and No. 2016-556 QPC of 22 July 2016 of the Constitutional Council »; see, for example, Court of Cassation, Criminal Chamber, 6 March 2019, No. 18-90.035 : Dr. fisc. 2019, No. 20, article 262, R. Salomon.
28 –
In particular, direct taxes (CGI, Arts. 1771 et seq.), turnover tax (CGI, Art. 1789), registration duties and land registration tax (CGI, Arts. 1837 et seq.) or stamp duties (CGI, Arts. 1840 0 et seq.).
29 –
For a comprehensive inventory of cumulative classifications, see JCl. Procédures fiscales, fascicle 705, Criminal Litigation: The General Offence of Tax Fraud and Other Offences Common to All Taxes, by S. Detraz, Nos. 11 et seq.
30 –
On this point, see A. Lévy and J. Monin de Flaugergues, Money Laundering: A Favoured Subject of Prosecution and Negotiated Justice: CDE 2017, dossier 24.
31 –
Under the criteria inArticle 121-7 of the Criminal Code defining complicity.
32 –
Constitutional Council, 28 June 2013, No. 2013-328 QPC, Assoc. Emmaüs Forbach: JurisData No. 2013-014412 ; Procédures 2013, commentary 267, case note by J. Buisson ; Dr. pén. 2013, commentary 141 and 149, case note by V. Peltier ; AJ pénal 2013, p. 471.
33 –
Paris Criminal Court, 32nd Chamber, 20 February 2019, No.11055092033, p. 31.
34 –
Court of Cassation, Criminal Chamber, 25 March 2015, No. 14-85.251 : Dr. pénal 2015, article 8, commentary by S. Détraz.
35 –
F. Deboissy, Laundering of Tax Fraud Proceeds: After the Flow, the Ebb?, cited above..
36 –
Under the wording ofArticle L. 228 of the LPF as currently in force, the most serious cases include, in particular, those resulting in the application, to tax exceeding 100 000 euros, of: 1° the 100 % surcharge underArticle 1732 of the CGI ; 2° the 80 % surcharge under subparagraph c of paragraph 1 of Article 1728, subparagraphs b or c of Article 1729, paragraph I of Article 1729-0 A or the final paragraph of Article 1758 of the same Code; 3° the 40 % surcharge under subparagraph b of paragraph 1 of Article 1728 or subparagraphs a or b of Article 1729 of that Code where, during the preceding six calendar years, the taxpayer had already, following an earlier audit, incurred the surcharges referred to in 1° and 2° of this I and in this 3°, or been the subject of an administrative complaint.
37 –
« Without prejudice to: an expression commonly used in legislation to indicate that the rule enacted leaves another provision wholly intact », G. Cornu, Legal Vocabulary: PUF, Quadrige collection, 11th ed., 2016.
38 –
Circular NOR FCPE412006C, 22 May 2014, Ministry of Finance and Public Accounts and Ministry of Justice, on combating tax fraud.
39 –
See BOI-CF-INF-40-10-10-20, 27 June 2019.
40 –
Where a settlement is concluded before collection,« the application of surcharges is assessed by reference to the latest financial consequences notified to the taxpayer ».
41 –
Court of Cassation, Criminal Chamber, 11 September 2019, No. 18-81.040, cited above
42 –
Ibid. : the judgment also states that money laundering is inherently clandestine only where its purpose is to conceal the beneficiary or the unlawful nature of the funds or property involved.
43 –
For application of this rule where the predicate offence is fraudulent bankruptcy, Court of Cassation, Criminal Chamber, 31 May 2012, No. 12-80.715 : Bull. crim., No. 139 ; Dr. pénal 2012, commentary 117, commentary by M. Véron ; Dr. sociétés 2012, commentary 173, commentary by R. Salomon ; RSC 2013, p. 868, case note by H. Matsopoulou ; D. 2012, p. 1678, commentary by S. Lavric ; RTD com. 2012, p. 628, commentary by B. Bouloc.
44 –
For application of this rule where the predicate offence is misuse of corporate assets, Court of Cassation, Criminal Chamber, 5 December 2012, No. 11-82.918 : JurisData No. 2012-028167.
45 –
BOI-CF-INF-40-10-10-40, 27 June 2019, § 80 et seq.
46 –
Court of Cassation, Criminal Chamber, 14 November 1994, No. 93-81.294.
47 –
Court of Cassation, Criminal Chamber, 18 December 2019, No. 19-82.496, FS-D : JurisData No. 2019-023036 ; Dr. pén. 2020, commentary 46, case note by Ph. Conte ; AJ pénal 2020, p. 132, case note by J. Goldszlagier.
48 –
On this point, see J. Goldszlagier, Presumption of Unlawful Origin of Funds in Money Laundering: The Early Maturity of Case Law: AJ Pénal 2020, p. 132, cited above.
49 –
Dalloz Money Laundering Encyclopaedia 2017, by M. Segonds, No. 22.
50 –
Court of Cassation, Criminal Chamber, 24 February 2010, No. 09-82.857, FS P + F : JurisData No. 2010-000779 ; Bull. crim., No. 37 ; Dr. pénal 2010, commentary 42, commentary by M. Véron ; RPDP 2010, 447, case note by M. Segonds.
51 –
Court of Cassation, Criminal Chamber, 1 April 2020, No. 19-80.875, P+B+R+I : JurisData No. 2020-005270. JCP E 2020, 1197 : « since the Court of Cassation can satisfy itself that the conduct constituting the predicate offence for money laundering, committed in Russia and consisting in misappropriation of funds to the detriment of public bodies, may in France be classified as misappropriation of public property, conduct defined and penalised byArticle 432-15 of the Criminal Code, already in force when the respondents committed the conduct, the Financial Public Prosecutor was entitled to conduct a preliminary investigation in France into laundering of the funds constituting its proceeds ».
52 –
Court of Cassation, Criminal Chamber, 18 March 2020, No. 18-86.491, P+B+I : JurisData No. 2020-003785 ; JCP E2020, 1196.
53 –
Court of Cassation, Criminal Chamber, 6 March 2019, No. 18-81.059, P+B+I : JurisData No. 2019-003228 ; JCP G 2019, 396.
54 –
Commentary on Constitutional Council, 24 June 2016, No. 2016-545 QPC, Alec W and others and 2016-546 QPC, Jérôme C, p. 22.
55 –
Court of Cassation, Criminal Chamber, 28 June 2017, No. 16-81.149, P+B : JurisData No. 2017-012774 ; Dr. fisc. 2017, No. 45, news item 587, O. Fouquet and B. Hatoux.
56 –
B. Ricou, The Criminal Chamber’s Guide to Applying the Constitutional Council’s Interpretative Reservations on Cumulative Criminal and Tax Proceedings and Sanctions: Lexbase Hebdo, tax edition, No. 801, 7 November 2019.
57 –
Conseil d’État, Section, 21 December 2018, No. 409678, Eden company : JurisData No. 2018-023424 ; Dr. adm. 2019, commentary 25, case note by S. Roussel ; Procédures 2019, commentary 59, commentary by S. Deygas.
58 –
Court of Cassation, Criminal Chamber, 11 September 2019, No. 18-81.980, FS.P+B+R+I, cited above
59 –
Court of Cassation, Criminal Chamber, 11 September 2019, No. 18-81.040, P+B+R+I, cited above
60 –
An increase to one million euros appears contemplated by the Bill of 30 June 2020 « to implement a policy of “zero tolerance” against tax and social security fraud », available at http://www.assemblee-nationale.fr/dyn/15/textes/l15b3155_proposition-loi.
61 –
Which provides that « The maximum fine applicable to legal entities is five times that provided for natural persons by the statute penalising the offence ».
62 –
See, on this point, the impact assessment for the bill on combating fraud of 27 March 2018, which expressly acknowledges this origin, available at https ://www.senat.fr/leg/etudes-impact/pjl17-385-ei/pjl17-385-ei.pdf.
63 –
Y. Rutschmann and G. Pellegrin, Prosecution and Punishment of Tax Fraud: Developments in Criminal Exposure under the Act of 23 October 2018 on Combating Fraud, cited above.
64 –
For a study of the legal nature of joint and several liability underArticle 1745 of the CGI, S. Detraz, The Nature of Joint and Several Liability underArticle 1745 of the CGI : Dr. fisc. 2012, No. 50, study 551. Nor can this mechanism be equated with that inArticle 480-1 of the Code of Criminal Procedure providing for joint and several liability of persons convicted of the same offence for restitution and damages.
65 –
Court of Cassation, Criminal Chamber, 10 June 1987, No. 86-94.488 : Bull. crim., No. 239 ; Dr. fisc. 1988, No. 7, commentary 325.
66 –
Court of Cassation, Criminal Chamber, 19 May 2010, No. 09-83.970, FS-P + F : JurisData No. 2010-008666 ; Bull. crim., 2010, No. 89 ; Dr. pén. 2010, commentary 96, case note by J.-H. Robert.
67 –
Court of Cassation, Criminal Chamber, 12 September 2012, No. 12-80.574 QPC : JurisData No. 2012-020793 ; Dr. fisc. 2012, No. 43, article 493, R. Salomon ; Dr. fisc. 2012, No. 50, study 551, S. Detraz ; Dr. pén. 2012, commentary 146, case note by J.-H. Robert.
68 –
S. Detraz, The Tax Administration Cannot Appeal on Points of Law against the Criminal Dispositions of an Appellate Judgment: RSC 2018, p. 695.
69 –
Court of Cassation, Criminal Chamber, 23 October 2019, No. 18-85.088, P+B+I : JurisData No. 2019-018531 ; Dr. fisc. 2019, No. 46, article 437, R. Salomon ; Dr. pén. 2019, commentary 206, case note by J.-H. Robert.
70 –
Court of Cassation, Criminal Chamber, 12 September 2012, No. 12-80.574 QPC, cited above.
71 –
J.-H. Robert, She Is She, I Am I, Despite Joint and Several Liability, case note on Court of Cassation, Criminal Chamber, 23 October 2019, No. 18-85.088, P+B+I, cited above
72 –
Court of Cassation, Commercial Chamber, 5 September 2018, No. 17-13.626, FS-P+B+I : JurisData No. 2018-015021 ; Lettre act. proc. coll. civ. et com., October 2018, alert 255; Act. proc. coll. 2018, commentary 241, case note by B. Thullier : « joint and several liability imposed on a corporate executive underArticle 1745 of the General Tax Code, which constitutes security for recovery of the tax claim and does not seek to compensate harm » (emphasis added).
73 –
Court of Cassation, Criminal Chamber, 10 June 1987, No. 86-94.488, cited above
74 –
Reaffirmed very recently, Court of Cassation, Criminal Chamber, 24 June 2020, No. 19-81.134 : JurisData No. 2020-008651 ; Dr. fisc. 2020, No. 27, news item 229.
75 –
Court of Cassation, Criminal Chamber, 6 December 2017, No. 16-81.857, F-P+B : JurisData No. 2017-024778 ; Dr. fisc. 2018, No. 5, commentary 165, commentary by N. Guilland.
76 –
Court of Cassation, Criminal Chamber, 23 October 2019, No. 18-85.088, P+B+I, cited above.
77 –
Bill of 30 June 2020 « to implement a policy of “zero tolerance” against tax and social security fraud », available at http://www.assemblee-nationale.fr/dyn/15/textes/l15b3155_proposition-loi.
78 –
Court of Cassation, Criminal Chamber, 3 April 2019, No. 18-83.052, confirmed by Court of Cassation, Criminal Chamber, 11 September 2019, No. 18-81.040, cited above
79 –
On this point, see Court of Cassation, Criminal Chamber, 15 January 2020, No. 19-80.891 : JurisData No. 2020-000330.
80 –
Court of Cassation, Criminal Chamber, 29 January 2020, No. 19-84.631 : JurisData No. 2020-001535.
81 –
Court of Cassation, Criminal Chamber, 29 January 2020, No. 17-83.577 : JurisData No. 2020-000933.
82 –
Court of Cassation, Criminal Chamber, 4 May 2017, No. 16-87.330 : JurisData No. 2017-008267.
83 –
Court of Cassation, Criminal Chamber, 24 June 2020, No. 19-85.074 : JurisData No. 2020-008652.
84 –
Introduced byAct No. 2013-1117, 6 December 2013 on combating tax fraud and serious economic and financial crime, cited above.
85 –
Ibid.
86 –
For an analysis of this question, Ph. Conte, Money Laundering: An Instantaneous Offence, case note on Court of Cassation, Criminal Chamber, 11 September 2019, No. 18-81.040, P+B+R+I and 18-83.484, P+B+R+I: Dr. pén. 2019, commentary 181.
87 –
Court of Cassation, Criminal Chamber, 11 September 2019, No. 18-81.040, cited above
88 –
Circular NOR FCPE412006C, 22 May 2014, Ministry of Finance and Public Accounts and Ministry of Justice, on combating tax fraud, cited above, p. 15 : « The DGFiP may lodge a complaint or join as a civil party on behalf of the French State in cases where tax-related harm has emerged, including cases in which it did not initiate the prosecution. These may include VAT fraud, the design and marketing of cash-register software permitting manipulation, or laundering of tax fraud proceeds ».
89 –
Court of Cassation, Criminal Chamber, 6 February 1969, No. 66-91.594 : Bull. crim., No. 65.
90 –
R. Salomon, Business Criminal Law: JCP E 2019, 1350. – See also Court of Cassation, Criminal Chamber, 16 April 1970, No. 68-92.344 : Bull. crim., No. 132 ; Bull. crim., No. 132 ; Dr. fisc. 1970, No. 28, commentary 834, case note by J. Cosson.
91 –
Court of Cassation, Criminal Chamber, 17 April 1989, No. 88-81.189 : JurisData No. 1989-701768 ; Bull. crim., No. 156 ; Dr. fisc. 1989, No. 45, commentary 2122.
92 –
Court of Cassation, Criminal Chamber, 8 November 2017, No. 17-82.968, P+B : JurisData No. 2017-022202 ; Dr. fisc. 2017, No. 49, article 566, R. Salomon.
93 –
Court of Cassation, Criminal Chamber, 17 December 2014, No. 14-86.560 : JurisData No. 2014-032048.
94 –
In this respect, the State has obtained amounts of 100 000 euros or one million euros and, on one occasion in a case under appeal, 800 million euros, with no legal justification other than the wording quoted above.
95 –
Court of Cassation, Criminal Chamber, 29 January 2020, No. 17-83.577, P+B+I : JurisData No. 2020-000933 ; Dr. fisc. 2020, No. 13, commentary 213, case note by S.-M. Cabon ; Dr. fisc. 2020, No. 18, article 230, R. Salomon. – On this point, see S.-M. Cabon, Tax Fraud and Money Laundering: The Requirement to Give Reasons as a Safeguard for the Proportionality of Confiscation and a Framework for Assessing the State’s Harm, case note on Court of Cassation, Criminal Chamber, 29 January 2020, No. 17-83.577, P+B+I, cited above