The use of social networks in tax audits

In recent years, the French tax authorities have expanded their range of tools for detecting possible fraud. Today, even your social media posts can provide clues. But how far can the French tax authorities go?

What could the French tax authorities do before 2024?

Since 2021, the French tax authorities have had the right to collect and use content that is freely accessible on the Internet by means of computerised and automated processing.

This includes everything that is public on platforms such as:

• Facebook, Instagram, LinkedIn and other social networks.
  
• Advertising sites or other online sales platforms.
  

The data collected online enables the French tax authorities to establish proof of tax fraud offences, such as :

• Hidden activity based on publications promoting services or commercial activities,
  
• False residence abroad based on photos posted regularly in France that contradict a declaration of tax residence abroad.
  

However, until now, the French tax authorities were not authorized to collect data that was not freely accessible on the internet. These were sites or platforms protected by a password or accessible only after registration.

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What has changed with the Finance Act for 2024?

Article 112 of the Finance Act 2024 takes the French tax authorities one step further: they can now go even further in collecting information online.

Tax agents can now:

• Use aliases to create fictitious accounts and access restricted content.
  

Example: Access to private Facebook groups or limited Instagram profiles.

• Interact actively in online discussions, including with persons suspected of tax evasion.
  

Example: Asking questions in a forum or commenting on an article to obtain more information.

These new practices are provided for in the new article L10-0 AD of the Livre des Procédures Fiscales (LPF).

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Use of social networks in tax audits

Social networks are not just used to detect tax fraud. They are also used in tax audits, particularly those involving international activities.

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Why is LinkedIn a great source of information?

• To verify the functions of a company's employees:
  

An employee's LinkedIn profile may reveal different responsibilities or missions from those declared by the company.

• To confirm the actual location of an activity:
  

If a person claims to work in London but their activity on LinkedIn shows a majority presence in France, this could attract the attention of the French tax authorities.

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Clues, not proof

Apart from cases of tax fraud, information collected online cannot in itself be used as sufficient evidence by the French tax authorities. However, they do constitute clues. It is then up to the company being audited to prove the contrary.

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In summary: adopt best practice!

The French tax authorities are adapting to new digital practices.

Here are a few tips to avoid finding yourself in an uncomfortable situation during a tax audit:

• Regularly check your online publications (company website, social networks): Make sure that the information available online is consistent with your tax returns.
  
• Make your staff aware of the importance of being vigilant in their online communications. Their publications should reflect their role within the company.