An AI tool uncovered over 20,000 hidden pools in France

Summary: 

An AI tool utilizing satellite mapping was employed to identify tax evaders by detecting swimming pools, ensuring owners pay about €10 million in taxes.

Client: France

Problem Statement: 

In 2020, France had over 3.2 million private swimming pools. Since pools increase property values, they often result in higher property and residency taxes and must be declared within 90 days of completion. Typically, a 30 square meter pool incurs an additional annual tax of about €200. According to French law, an illegally constructed pool can lead to fines of €6,000 per square meter. Tax authorities were considering software that could eventually detect undeclared pools, home extensions, patios, or gazebos, all of which affect property taxes.

Results: 

• The tax authority in France discovered 20,356 undeclared private pools.
• Collected approximately €10 million in taxes.

AI Solution Overview:

An AI tool used satellite images to detect swimming pools in nine regions of France. The algorithms, developed by the French tax agency in collaboration with Capgemini, a French consulting firm, utilize open-source software by Google. This system identifies pools on aerial images and cross-references them with land registry databases.

To ensure accuracy, human verifiers check each flagged result to correct any mistakes, such as blue tarps being misidentified as pools. The French tax agency noted that the algorithm was refined during the testing period through machine learning (ML), achieving a low margin of error. The error rate for pool detection is around 30%, partly due to the AI’s difficulty in distinguishing between non-taxable and in-ground pools or mistaking blue tarps for pools. 

After being flagged by the tool, 94% of taxpayers contacted by authorities confirmed they had taxable swimming pools. The software may be expanded in the future to recognize other structures on aerial images, such as terraces or pavilions, which also require registration if permanently anchored in the ground.

References: 

1. French tax officials use AI to spot 20,000 undeclared pools. https://www.theguardian.com/world/2022/aug/29/french-tax-officials-use-ai-to-spot-20000-undeclared-pools
2. AI technology makes a splash! Thousands of undeclared private swimming pools in France are uncovered by tax officials using artificial intelligence to analyse satellite images. https://www.dailymail.co.uk/sciencetech/article-11160005/Thousands-undeclared-private-swimming-pools-France-uncovered-using-AI-technology.html
3. French Tax Collectors Use A.I. to Spot Thousands of Undeclared Pools. https://www.nytimes.com/2022/08/30/world/europe/france-taxes-pools-artificial-intelligence.html

Industry: Public Services

Vendors: The French tax agency and Capgemini

Client: France

Publication Date: 2021