Ihen, following an audit, the tax administration wants to make a correction, it must send the taxpayer a “proposal for rectification”, which he will accept or contest. The absence of this document entails the nullity of the control. The administration is supposed to send it to the address given by the taxpayer, even if it has good reason to suspect that he does not actually reside there. This is what the following case reminds us.
Until 2010, Mr. X, a property developer, declared his income in Lyon (Rhône). From 2011, he declares to the Rhone administration that he is domiciled in Saint-Martin, a French overseas collectivity located in the West Indies, but assimilated, for tax purposes, to a foreign country (such as New Caledonia and French Polynesia), to which France is bound by an agreement to eliminate double taxation. In his tax return, he applies a 30% deduction, like the convention and general tax code authorize it.
In 2015, he was subject to a tax audit for, in particular, 2013 and 2014. The auditor, who wrote to him in Saint-Martin, noted that it was not him, but an agent, who withdrew the registered letters and that his replies are always posted from Lyon.
After having, by virtue of his right of communicationquestioned several public and private organizations (Primary Health Insurance Fund, Pôle Emploi, town hall, banks and airlines), she understands that the family actually resides in a commune in the Rhône: their domicile in Saint-Martin is fictitious and probably intended to obtain, after five years, the (advantageous) status of tax resident of this island.
900,000 euros claimed
She thinks to confuse Mr. X by sending him her proposed rectification to the address she discovered in the Rhône – and only this one. She is claiming some 900,000 euros from him (taxation on income of sums of undetermined origin and increases for occult activity or the desire to evade tax).
Alas, he does not take the bait and the letter comes back with the mention “unclaimed envelope”. When she puts the sums “in recovery”, so that he pays them, Mr. X seizes the administrative justice and asks that it discharge him, for irregularity of procedure.
The administrative court of Lyon grants it to him, on March 9, 2021. He considers that the findings of the administration are not sufficient to establish the fictitious nature of the residence of Saint-Martin. But the Minister for the Budget, in his capacity as head of administration, appealed and won his case with the Administrative Court of Appeal of Lyon, on June 30, 2022 (21LY01560 And 21LY01558). Mr. X appeals in cassation.
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