Article 751 of the General Tax Code establishes a tax presumption that is particularly restrictive for taxpayers. This provision allows the tax authorities to reintegrate certain assets divested by the deceased into the estate assets. You need to understand the mechanisms of contestation to effectively defend your rights.

Challenging this presumption requires a rigorous legal strategy and a thorough knowledge of litigation procedures. You have the legal means to overturn this presumption, provided you comply with strict conditions and deadlines.

What does it mean to contest article 751 of the CGI?

Challenging article 751 of the CGI means questioning the application of the 751 tax presumption to your asset situation. This presumption considers that certain assets transmitted before death form part of the taxable estate.

The tax authorities presume that assets divested by the deceased in the three years preceding his death must be reintegrated into the estate assets. You have to prove the contrary to avoid being taxed. This reversed burden of proof is the main challenge in contesting a tax claim.

The challenge aims to demonstrate that the conditions for the application of article 751 are not met in your case. In particular, you can prove that the transfer was not fictitious or that the deceased did not retain enjoyment of the property. Tax presumptions can be rebutted by corroborating evidence.

The legal basis of the challenge

The legal basis for your dispute is based on the principle of the reversal of legal presumption. Article 751 establishes a simple, non-irrefragable presumption, which you can rebut with evidence to the contrary. Tax law recognizes this possibility of challenge.

You must rely on the general principles of tax law to guarantee your rights. The burden of proof initially lies with the tax authorities to establish the conditions for the application of article 751. Once these conditions have been established, the burden shifts to you to prove that the presumption does not apply.

In the context ofdirect taxation, the tax authorities are obliged to respect the adversarial principle. You have the right to access the file, to present your observations and to contest the elements retained. Jurisprudence has gradually defined the contours of this right.

Rulings by the Conseil d’Etat have established that tax reintegration can only take place in the presence of serious and concordant evidence. You can invoke these jurisprudential principles to strengthen your contentious arguments.

Conditions for a successful challenge

To effectively challenge article 751, you need to build up a solid evidentiary case comprising at least 5 distinct and convergent elements. This generally requires between 3 and 6 months of rigorous document gathering. The essential documents to be gathered include : the authenticated deed of gift, bank statements of the deceased and beneficiaries for the 3 years preceding the death, rent receipts or water/electricity bills in the name of the new owners, notarized attestations from third-party witnesses, previous tax returns (IFI, property income), proof of payment of charges and works, correspondence establishing the absence of enjoyment, home insurance policies, furnishing bills in the name of the donees, and any evidence of actual occupation by the beneficiaries.

In the context of an estate subject to Article 751, documentary consistency means in practical terms that your bank statements must show the absence of deductions for property charges, that rent receipts correspond to the bank transfers made, and that the dates match perfectly between all the documents. A practical case in point illustrates this requirement: in 2022, the Paris Administrative Court upheld a taxpayer’s challenge, having produced 8 converging pieces of evidence demonstrating that his father, who had donated an apartment 18 months before his death, had never lived there after the donation. The decisive elements included EDF bills in the son’s name, attestations from neighbors confirming exclusive occupation by the donee, and above all the total absence of keys in the deceased’s possession at the time of death.

Property dismemberment situations call for heightened vigilance. You must avoid three major pitfalls: contradictions between your declarations and the material evidence (for example, asserting a donation while keeping the invoices in your name), insufficient proof consisting in producing only the notarized deed without proof of actual execution, and temporal inconsistencies between the dates of the donation and the first acts of occupation by the beneficiaries. You must prove that the retention of the usufruct was based on real economic considerations and not on a desire to avoid inheritance tax, for example by documenting the income derived from the property or the deceased’s housing needs.

The dispute procedure step by step

The first step is to lodge a contentious claim with the tax authorities within a strict deadline: up to December 31 of the second year following the assessment. For example, for a tax reassessment notified in May 2023, you can make a claim up to December 31, 2025. This claim must be reasoned, precise and documented, clearly setting out the legal and factual grounds for your dispute. The administration has six months in which to respond, its silence being deemed an implicit rejection. This preliminary administrative phase generally takes between 6 and 9 months.

In the event of explicit or implicit rejection, you have two months in which to take your case to the relevant administrative court. Under the contentious tax system, these deadlines must be strictly adhered to, otherwise the case will be inadmissible. The judicial phase requires you to build up a solid case file, including all supporting documents and a detailed brief setting out your arguments. Proceedings before the administrative court take an average of 18 to 24 months, depending on the complexity of the case and how busy the court is. Statistics show a partial or total success rate of around 35% to 40% for well-documented challenges.

For the duration of the procedure, you can apply for a deferment of payment of the disputed duties, generally subject to the provision of bank guarantees. This option saves you from having to pay the sums in dispute immediately. As far as costs are concerned, you should expect to pay between 5,000 and 15,000 euros in legal fees for a complete procedure, depending on the complexity of the case and the level of jurisdiction reached. These fees are in addition to any expert appraisal and guarantee fees.

Mistakes to avoid when contesting

The main mistake is to let the time limit for lodging a claim expire, which, according to administrative statistics, is the cause of 40% of rejected claims. Once these deadlines have passed, your claim becomes inadmissible, whatever the merits of your arguments. For example, if you miss the deadline for a tax reassessment of €150,000, you will have to pay the full amount of the tax plus interest for late payment, i.e. a financial loss of up to €180,000. You must respect the procedural timetable.

You must not underestimate the importance of evidential documentation, which is responsible for 35% of unsuccessful challenges. A claim based solely on assertions without material evidence is doomed to failure. Insufficient evidence is the most common reason for rejecting claims. The courts require concrete proof: bank statements, notarized attestations, rent receipts, or detailed testimony demonstrating the absence of use of the property by the deceased.

The lack of consistency between your statements and the elements in the file considerably weakens your position. You need to ensure that your arguments are consistent with the documents produced. Contradictions are systematically exploited by the tax authorities. In a ruling handed down on March 15, 2018, the Lyon CAA rejected a challenge in which the taxpayer claimed that the deceased no longer occupied the property, while the electricity and water bills remained in his name, demonstrating an inconsistency fatal to his defense.

You must not neglect the amicable phase of the procedure. A dispute brought directly before a judge without first attempting to reach an amicable settlement may be considered premature. The compulsory preliminary administrative procedure must be respected. The average cost of a procedural error is the maintenance of the initial adjustment, plus late payment interest calculated at the legal rate, as well as any penalties of up to 40% of the recalled duties in the event of deliberate failure to comply.

Support from a tax lawyer

The complexity of contesting article 751 of the CGI varies considerably from one situation to another. For simple cases with clear documentation, an administrative claim can be considered without legal assistance. On the other hand, complex situations involving sophisticated asset arrangements or financial stakes in excess of 100,000 euros justify the intervention of a specialized tax advisor. The tax lawyer will analyze your case, draw up the evidentiary file and devise an appropriate litigation strategy. Statistics show a success rate of 65-70% with professional assistance, compared with only 25-30% for challenges conducted alone. The cost of assistance generally varies between 5,000 and 15,000 euros, depending on the complexity of the case and the procedural phase reached.

Before taking legal action, you should explore amicable alternatives, which may prove more advantageous. Tax settlements, which are possible in around 30% of cases, enable you to negotiate a reduction in the duties claimed directly with the tax authorities. Tax mediation is another option for resolving disputes without litigation. If you opt for legal assistance, choose a lawyer with a specialization in inheritance law, significant experience in tax litigation and verifiable references. Assistance can be tailored to your needs: one-off advice on administrative claims, full representation before the courts, or support limited to the preparation of the evidentiary file. With a view to overalltax optimization, your advisor will also help you implement preventive measures to secure your future asset transfers.

Alternatives to litigation

Before embarking on lengthy and costly litigation, there are several ways of resolving disputes relating to article 751 of the CGI. Tax settlements are the first option to be seriously considered. This approach allows you to negotiate directly with the tax authorities to find common ground, without going to court.

If the dispute persists despite your attempts at an amicable settlement, recourse to the mediator of the French Ministries of Economy and Finance is an appropriate intermediary solution. This impartial third party can facilitate dialogue and propose balanced solutions.

To access these alternative channels, certain conditions must be met:
– Have first attempted an amicable settlement with the tax department
– Present a solidly argued case
– Demonstrate your good faith throughout the procedure

The statistics are encouraging, since around 50% of cases submitted to tax mediation result in a satisfactory agreement for both parties. However, there are certain limits to these alternatives, and it is important to be aware of them. The administration is never obliged to accept a settlement proposal, and some particularly complex disputes or those involving fundamental points of law cannot be resolved through mediation.

Before choosing between litigation and these alternatives, an in-depth analysis of your situation by a professional will enable you to identify the strategy best suited to your particular case.