A: Interest on arrears

I. - Any tax claim, the establishment or collection of which is the responsibility of the tax authorities, which has not been paid within the legal time limit shall give rise to the payment of late payment interest. In addition to this interest, the penalties provided for in this Code may apply.

II. - Interest for late payment is not due:

1. In respect of items of taxation for which a taxpayer discloses, by an express indication on the declaration or deed, or in an appended note, the legal or factual reasons which lead him not to mention them in full or in part, or to give them a classification which would, if it were founded, lead to a reduced taxation, or mentions deductions which are subsequently recognised to be unjustified;

2. In respect of tax items relating to a return filed within the prescribed time limits, where the principle or procedures for declaring these items come up against either a difficulty in interpreting a tax provision that came into force on or after 1 January of the year preceding the declaration deadline, or a difficulty in determining the tax implications of an accounting rule, and the following conditions are met:

1° The taxpayer in good faith has attached to his return a copy of the request, filed before the expiry of the return deadline, by which he asked the administration, in a precise and complete manner, for a position on the question without obtaining a reply;

2° The administration has not formally taken a position on the question before the expiry of the return deadline;

2 bis. If the cause of the increase pursued by the administration is a dispute over the rental value of the property mentioned in I of Article 1496 and in l'article 1498 and if it is shown, on the one hand, that the taxpayer in good faith has paid the tax on the basis of the roll drawn up by the administration and, on the other hand, that this was not the result of a defect or inaccuracy in the declaration;

3. Except in the case of wilful default, where the shortfall in the figures declared, assessed for each property, does not exceed one tenth of the tax base as regards registration duties or land registration tax;

4. Except in the case of wilful default, where the shortfall in the figures declared does not exceed one-twentieth of the taxable amount as regards income tax and corporation tax.

The following are treated in the same way as a shortfall in the declaration where they are not justified:

a. Expenses for bookkeeping and membership of an approved management centre or association giving entitlement to the tax reduction provided for in Article 199 quater B ;

b. Expenses giving entitlement to the tax reductions provided for in Article 199 septies ;

c. Expenses giving entitlement to the tax credits provided for in articles 200 quater and 200 quater A ;

d. Research expenditure giving entitlement to the tax credit provided for in article 244 quater B;

e. Collaborative research expenditure giving entitlement to the tax credit provided for in article 244 quater B bis.

In the event of adjustments being made to the results of companies belonging to groups mentioned in article 223 A or article 223 A bis, the inadequacy of the figures declared is assessed for each company.

III. - The rate of late payment interest is 0.20% per month. It applies to the amount of tax claims for which the taxpayer is liable or whose payment has been deferred.

IV. - 1. Late payment interest is calculated from the first day of the month following the month in which the tax was due until the last day of the month of payment.

However, with regard to income tax and with the exception of tax relating to capital gains realised on the assets mentioned in articles 150 U to 150 UC, the starting point for calculating late payment interest is 1 July of the year following the year in respect of which the tax is assessed.

As regards real estate wealth tax, the starting point for calculating late payment interest is 1 July of the year in respect of which the tax is assessed.

In the event of taxation established under the conditions set out in articles 201 to 204, the starting point for calculating late payment interest is the first day of the fourth month following that of the expiry of the declaration deadline.

2. Late payment interest ceases to be deducted when the increase provided for in Article 1730 is applicable.

3. Where Article 1728 is applied, the calculation of the late payment interest is stopped on the last day of the month of the rectification proposal or of the month during which the declaration or deed was filed.

4. Where article 1729 is applied, the calculation of late payment interest is stopped on the last day of the month of the rectification proposal or, in the case of staggered additional taxation, of the month during which the tax assessment is to be collected.

5. In the event of late payment of a tax claim that must be paid to an accountant of the tax authorities, late payment interest is calculated from the first day of the month following the deadline for filing the declaration or deed acknowledging the taxpayer's debt or, failing this, receipt of the notice of assessment issued by the accountant. For any tax debt that must be paid without a prior declaration, interest is calculated from the first day of the month following the month in which the principal should have been paid until the last day of the month of payment.

6. Where Article L. 188 A of the Book of Tax Procedures, the late payment interest is calculated from the last day of the month of the proposed adjustment made within the initial recovery period or, failing that, from the last day of this period.

7. In the event of a breach of the undertakings given pursuant to b of 2° and 7° of 2 of article 793, interest for late payment shall be deducted at the rate provided for in III for the first five years of late payment, this rate being reduced for the subsequent annual instalments by one-fifth, one-quarter or one-third respectively, depending on whether the default is noted before the expiry of the tenth, twentieth or thirtieth year following the transfer.

8. When the agreement provided for in the first paragraph of article 795 A terminates under the conditions defined by the standard provisions mentioned in the same paragraph, the late payment interest is calculated from the first day of the month following the month during which the agreement terminated.

V. - The amount due in respect of late payment interest is reduced by 50% in the event that the taxpayer voluntarily submits an amending tax return before expiry of the period allowed for the administration to exercise its right of recovery, provided, on the one hand, the rectification does not concern an offence committed exclusively in good faith and, secondly, that the declaration is accompanied by payment of the simple duties or, in the case of taxes collected by assessment, that payment is made no later than the payment deadline indicated on the tax notice.

In the absence of immediate payment of simple duties or, in the case of taxes recovered by assessment, payment made no later than the final date for payment shown on the tax notice, the benefit of the 50% reduction in late payment interest provided for in the first paragraph of this V is retained in the event of acceptance by the public accountant of a payment plan for simple duties.