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I’m a director or a sharelholder of a company subject to tax adjustments: What are my risks?
It depends. When a company has received a tax adjustment following an audit, it is not unusual for the directors and shareholders to be subject to individual tax audits as they are considered to have benefited from the untaxed profits. Double taxation may arise. For example, the tax authority may consider that distribution of profits are hidden under benefits in kind (e.g. real estate considered as on shareholder free disposal, free issue of shares to shareholders…), personal expenses charged to the company (trips, reception, car, telephone...), shareholders’ goods or assets acquired by the company with an excessive cost (real estate, shares, patents…), sale of company’s assets to the shareholders at a low price. These kinds of advantages may be considered as distributed incomes. Moreover, any person managing legally or in fact, directly or indirectly, a company or any structure may be declared jointly liable of the company’s tax payments if his actions have rendered the recovery of tax impossible. Guarantees The shareholders or directors’individual tax audit and the company’s tax audit are separated, and each one is allowed the benefit of specific guarantees. |