This article was first published on Tax@Hand, and is reproduced on this blog with the authorization of its authors.
France has completed the necessary procedures to transpose into its domestic law the provisions of the EU public country-by-country (CbC) reporting directive (Directive (EU) 2021/2101) published on 24 November 2021. The directive entered into force on 21 December 2021, with EU member states required to transpose the directive into national legislation no later than 22 June 2023. France has complied with this obligation through the publication of an ordinance (No. 2023-483) on 21 June 2023) and two decrees (Nos. 2023-493 and ECOT2316682A) on 22 June 2023.
Under the directive, multinational groups with consolidated global turnover exceeding EUR 750 million and certain standalone undertakings, are required to make publicly available an annual report containing prescribed income tax information. In France, the new public reporting requirement applies to financial years (FYs) beginning on or after 22 June 2024.
In line with the directive, the French rules provide for the mandatory public disclosure of certain income tax information for entities or groups that exceed the following thresholds over a period of two consecutive FYs:
- Ultimate parent entities (UPEs) located in France, with global consolidated turnover exceeding EUR 750 million;
- French standalone undertakings with turnover exceeding EUR 750 million;
- French-based subsidiaries (excluding small and micro enterprises) of UPEs resident in non-EU/European Economic Area (EEA) jurisdictions with global consolidated turnover exceeding EUR 750 million;
- French-based branches with turnover exceeding EUR 12 million of UPEs resident in non-EU/EEA jurisdictions with global consolidated turnover exceeding EUR 750 million; and
- French-based branches with turnover exceeding EUR 12 million of standalone undertakings resident in non-EU/EEA jurisdictions with turnover exceeding EUR 750 million.
The banking sector is excluded from the scope of the new reporting rules, as provided for by the directive.
Safe harbor provision
France has chosen to adopt the safe harbor clause allowing information which could be seriously prejudicial to the commercial position of the entities concerned to be excluded from the public CbC report. Any information omitted must be made public in a subsequent report within five years from the date of its original omission. When this exception is applied, the reasons for omission must also be clearly stated. Information concerning jurisdictions contained in the EU list of noncooperative jurisdictions (both annex I (referred to as the “black list”) and annex II (the “state-of-play document” or “grey” list)) can never be omitted.
Information required to be provided
The French rules listing the information to be provided in the public CbC report mirror those in the directive.
With regard to UPEs located in France, this information must include the relevant information in respect of controlled entities that belong to the same consolidated group.
The report must be written in French and filed with the registry of the commercial court within 12 months of the end of the relevant FY.
The report must then be made available to the public free of charge for at least five consecutive years via the website of the:
- UPE/standalone entity established in France;
- French branch of the standalone entity established in a third country or the website of the standalone entity; or
- UPE established in a third country that owns a subsidiary or branch located in France, or the website of one of its controlled entities (as defined in article L. 233-16 of the French Tax Code) or the website of its French branch.
Statutory auditors report and penalties
For each FY, the statutory auditors should certify in their report for the previous FY (FY-1) if the company or group of companies is within the scope of the public CbC reporting requirement and, if required, published and made available the CbC report for the FY immediately preceding the previous FY (FY-2).
The legislation does not currently provide for any specific penalties to be imposed for failure to comply with the public CbC reporting requirement.