France is using AI to clamp down on tax fraud

After a policy went into force on January 1, 2025, the French government is now fighting tax fraud with artificial intelligence (AI) and data mining. France’s government’s technological approach to tax matters includes monitoring social media and financial data to detect unreported income and fraudulent claims.

According to legal experts cited by Bloomberg in a Wednesday report, French tax authorities are relying on AI to uncover residents who are evading tax payments.

“The administration has put in place systems that throw up information that is triggering more and more inquiries,” explained Jerome Barre, a partner at Paris-based law firm Yards. 

He made the remarks during a presentation hosted by the French Association of Family Offices (AFFO), an organization representing the interests of wealthy families, including LVMH founder Bernard Arnault.

Barre said that the administration has implemented sophisticated systems that automatically flag suspicious financial activity.

Using AI to uncover tax fraud cases and numbers

Statistics from the French government show that tax fraud investigations and penalties reached €16.7 billion ($18.1 billion) in 2024, a 10% uptick from the previous year and more than double the amount recorded in 2020. 

Officials credit the rise in detected fraud cases to advancements in AI-driven data analysis, the hiring of nearly 800 tax inspectors, and the establishment of a dedicated intelligence unit to tackle complex financial crimes.

French authorities have also applied AI tools to uncover fraudulent applications for government grants. On March 18, officials revealed that AI detected 44,000 fraudulent renovation grant applications in 2024, amounting to €230 million in misallocated funds.

“The amount of information that authorities are seeking has multiplied, especially in some regions like Bordeaux,” attorney Barre said.

Fraudulent grant applications exposed

Authorities have been closely monitoring property valuations, which can have tax implications for both domestic and foreign owners of high-value estates. 

Last week, the Agence Nationale de l’habitat (ANAH), France’s national housing agency, reported a rise in fraudulent applications under the MaPrimeRénov scheme, which provides financial aid for home renovations. 

FranceInter shared data that showed one in ten applications sent in 2024 was illegal. These were usually from businesses or people looking for money for projects that didn’t exist.

The agency also listed some identity theft cases, which included offenders using real identities to submit fake applications, blocking legitimate applicants from receiving aid in the future.

“By 2024, we had detected 60,500 suspicious cases,” said Tarik Bounit, ANAH’s head of anti-fraud. “We confirmed 67% of the [flagged] fraud cases.” ANAH also received 2,300 tip-offs from individuals suspecting illegal financial activity.

Enhanced data sharing between government agencies and AI-driven fraud detection systems is helping authorities identify and prevent further losses. ANAH worked with data scientists to refine AI algorithms so they could easily detect unusual patterns in applications.

French authorities continue to crack down on fraud

France’s escalating anti-fraud measures come as the country grapples with economic pressures, including a growing budget deficit, inflation , political instability, and increased defense spending commitments. 

The government has expanded its crackdown beyond tax evasion, targeting fraud in state subsidies, social security, and trade.

“Fraud is no longer just about isolated cheaters; it has grown into a veritable criminal industry,” Budget Minister Amelie de Montchalin stated in a government report detailing the extent of financial fraud across various sectors.

On Tuesday, the trial of French art icon Bill Pallot began in Pontoise, a town north of Paris. The 61-year-old antiques expert and five others, including a well-known gallery, are facing charges in connection with selling forged collections.

Pallot, along with woodcarver Bruno Desnoues, is accused of producing and selling counterfeit 18th-century chairs, falsely claiming they once belonged to historical figures such as Madame du Barry, the mistress of Louis XV, and Queen Marie-Antoinette.

Per the New York Times, the scheme deceived the Palace of Versailles and private collectors, including a Qatari prince. The scam, which went undetected for years, resulted in an estimated €4.5 million ($4.9 million) in damages.

Authorities discovered the scam in 2016, prompting France’s Ministry of Culture to launch an audit of Versailles’ acquisitions policy to prevent similar fraud in the future.

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