29th November 2019
France, a nation best known for its food, wine, art and culture, is also a contracting hotspot – attracting flocks of international workers all year round. However, while the economy is booming in the Gallic nation, the country is also excelling in cracking down on tax and compliance.
In fact, almost a year after we wrote about the French plans to trawl social media for signs of tax evaders – these powers are finally about to be enacted into law. It’s important that any contractors looking to work in France are aware of this heightened scrutiny, and make compliance a top priority. Here’s what you need to know.
France social media legislation: tax evaders beware
According to reports, the French government’s plans to allow authorities access to social media in order to identify tax evaders are on the brink of being drafted into law. The legislation is currently being debated in parliament and would significantly enhance the state’s surveillance apparatus online by letting it collect masses of public data.
The draft bill would give authorities permission to carry out a three-year ‘experiment’ in monitoring data. This would allow the taxman access to a huge amount of information, the ability to review French social media profiles, photographs and posts, and use computer algorithms to detect tax evaders. The bill is expected to be passed by the end of the year.
Commenting on the legislation in an interview with newspaper Le Figaro, Budget Minister, Gerald Darmanin said that ‘if you say you’re not a fiscal resident in France and you keep posting pictures on Instagram from France, there might be an issue.’ In response to criticism, Mr. Darmanin stated that ‘there is nothing extraordinary here, other countries are already doing it, such as the United States or Britain since 2010, for example.’
A global trend
While the French tax authorities may only be beginning its social media monitoring to catch tax evaders, Gerald Darmanin’s assertion that the country is following the lead of other developed nations certainly carries weight. In the last decade, big data, machine learning and social media have all been targeted by countries trying to recover lost revenues.
For example, in the USA, the IRS has gone as far as reading private emails without a warrant. In Australia, the Tax Office has employed a dedicated team of ‘data doctors’ who have been tasked with developing models of ‘non-compliers’ so that programs can automatically track social channels for them.
In the UK, HMRC’s cutting edge machine learning system has been active since the turn of the decade. The system, named Connect, sifts through enormous quantities of information in its hunt for unpaid tax. In addition to this, it can also interface with over 60 other OECD countries globally, making it easier than ever to quickly exchange information. In its first four years, the tool enabled HMRC to reclaim an extra £4 billion in tax.
However, social media is only the tip of the iceberg when it comes to tax technology, with a recent report from KPMG stating that ‘robotics, automation and Artificial Intelligence will revolutionise the way tax technology operates.’ Types of machine learning such as ‘predictive modelling’, the kind used by Connect, will allow tax agencies to take hundreds of thousands of past fraud cases and create models based on common correlations.
What does it mean for contractors?
With the French government, and many other tax authorities using social media monitoring to catch tax evaders, it’s clear that compliance is becoming more heavily scrutinised. Therefore, it’s more important than ever to make sure you’re on the right side of the law, wherever you choose to work.
With the ever-increasing complexity of international legislation, then the chances of inadvertently breaking the law rise sharply. Whether you use social media or not, the tax landscape is difficult to navigate and any discrepancies could land you in serious trouble.
Therefore, it’s wise to employ the services of an expert in contractor compliance in order to make your transition abroad as seamless as possible.
Contact us today.