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This chapter is not exhaustive and is limited to broadly outline the tax consequences of the main events occurring when doing business in France. It does not constitute a tax advice or a client - attorney relationship. Materials are not suitable for tax analysis. Visitors are invited to consult a tax lawyer before taking any decision.
 Each year the French tax authorities called Direction Générale des Finances Publiques or " DGIFIP" audit 6% of the individuals.
Most of the audits are limited to the comparison of the tax returns of the taxpayer with the information and data received from third parties (Employers, Banks, Insurance companies etc...). This type of audit is called "Contrôle sur pièces".
The taxpayer, or his (her) adviser, are only informed if the auditor detects errors or inconsistencies giving potential ground for an assessment. Only a small percentage of this type of audit triggers a field audit.
A taxpayer may be selected for a field audit at different levels. It may be proposed by the local tax office called Service des Impôts des Particuliers or "SIP" which reviews its tax return. The selection is done according to criteria and risk factors provided each year by the DGFIP. The first step of the selection process is done automatically by computer analysis. The second step is done manually by a tax officer. If the tax officer considers that the taxpayer should be audited, he proposes the field audit to his (her) supervisor who will validate or not the proposal. The list of the taxpayers proposed for a field audit is then transferred to the head of the directorate. If the director approves the field audit, the taxpayer is listed in the annual field audit program.
The selection of taxpayers subject to field audit is made also at the regional and national level. The selection process is similar to the one used at the local level (See above).
Field tax audit may be also decided from individual data collected during investigations performed by the tax investigation directorate called DNEF. Taxpayers are not informed of these investigations. With this respect, the DNEF did substantially increase its investigation capacity to track tax information overseas by the creation of the data base called EVAFISC in November 2009.
The tax auditor has very little influence on the decision to audit a taxpayer. Before the beginning of the audit, he can however ask his supervisor not to audit a pre-selected taxpayer. If his supervisor agrees, the tax auditor could be moved to another tax audit. After the beginning of the audit, the tax auditor cannot stop the process. According to the circumstances, he can only suggest his supervisor to extend the scope of an audit or exceptionally to narrow it.
Each tax auditor must audit a specific number of taxpayers every year.
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