You declare late. An error punishable by penalties: not only late payment interest but above all an increase in your future income tax! Is this increase calculated on your outstanding balance? Or on your annual tax? In short, are you going to pay an increase on what you have already paid via withholding tax?
Here is a discreet but very informative opinion of the Council of Statepublished in Official newspaper of January 11 and reprized by Capital: the amount of duties charged to the taxpayer who has failed to fulfill his or her reporting obligations for income tax (…) corresponds to the amount of duties as mentioned in the roll, without deduction of any deposits and deductions already paid, writes the Council of State. Written like this, this rule may seem very technical. However, the conclusion is not difficult to understand.
In short. You forget to declare your income to the tax authorities. The deadline has passed. Mechanically, the sanctions fall. If you are taxable, the General Directorate of Public Finances (DGFiP) will sooner or later remind you of the order. But in the meantime your tax will have been increased: 10% if you correct the oversight yourself, 20% or even 40% in the event of formal notice. And this is added to late interest 0.2% per month.
But is this increase calculated – option 1 – on the balance that the tax authorities demand from you each year in September (therefore taking into account what has already been deducted at source) or – option 2 – on the tax d for the whole year concerned? Answer: option 2, the least favorable to the taxpayer: on income tax for the year concerned by the delay, without deduction of any advance payments and deductions already paid, as written by the Council of State. Zero ambiguity.
Taxes: what fine from the tax authorities if you validate your late income declaration?
The outcome of two cases relating to 2018 and 2020 tax
This opinion from the Council of State follows two separate tax cases handled by the Grenoble administrative court. One concerns income for the year 2019, therefore the 2020 tax; and the other on 2017 income, therefore the 2018 tax. The court referred the matter to the Council of State for its position on the following question: Do the rights imposed on the taxpayer (…) include, for the original taxes, the amount of sums already paid in the form of advance payments or withholdings at source, or are they limited to the balance remaining owed by the taxpayer? The Council of State therefore responded, in substance: forget the deposit or the withholding at source, the penalties are calculated on the annual tax. Point.
Taxes: I do not declare my income to the tax authorities, how can I avoid paying a big fine?