The administration may ask a taxpayer to justify the origin of a bank account or a life insurance contract abroad, never declared (art. L. 23 C of the LPF) and, without response, a heavy taxation applies.

In this case, the asset is presumed to have been acquired as part of a gift or inheritance between third parties, and the 60% rate is then applicable with a limitation period of 10 years (art. 755 of the CGI).

The crux of the dispute is that the ten-year statute of limitations does not begin from the date the assets were acquired, but from the date the tax authorities decide to invoke Article L.23 C of the French Tax Procedures Code (LPF). Therefore, in practice, the period may never begin to run.

On September 17, 2025, the Court of Cassation ruled that this system is compatible with EU law (Cass. com., No. 23-10.403).

A preliminary question previously posed by the Nanterre Court on this subject had been deemed inadmissible by the CJEU, but possibly only for a problem with the wording of the question.

Furthermore, and subsequent to the Court of Cassation’s decision, the Toulouse Court of Justice (judgment of December 18, 2025, No. 24/03436) took the opposite stance. The facts clearly illustrate the crux of the dispute outlined above: the tax authorities knew as early as 2012 that the taxpayer held an account in Belgium (automatic exchange of information), but only initiated their request for justification in 2022 and levied taxes in 2023, more than ten years after receiving this information. Following the reasoning of the Court of Justice of the European Union (CJEU), Commission v. Spain (January 27, 2022, C-788/19) – which had struck down the equivalent Spanish regime because it effectively rendered the statute of limitations illusory and imposed disproportionate penalties – the court ruled that the French system produced the same practical effect and granted relief from the inheritance and gift tax.

Does the question remain open?

We believe so.

Indeed, it would be illusory to think that the taxpayers in question can document the origin of their funds indefinitely… especially since, fortunately, there are few examples of a tax that cannot be subject to a statute of limitations. It should be noted that most banks do not keep account statements after ten years, and taxpayers often have to travel to the country where their bank branch is located if they want to obtain their statements, as banks are generally reluctant to send documents by email or even by post.

Article co-written by FareWell – Tax Lawyers & Florent Ruault