Country-by-Country Reporting – Compilation of Peer Review Reports (Phase 2)

France

1. France was first reviewed during the 2017/2018 peer review. This report is supplementary to France’s 2017/2018 peer review report (OECD, 2018[1]). The first filing obligation for a CbC report in France commences in respect of fiscal years commencing on or after 1 January 2016.

Summary of key findings

2. France’s implementation of the Action 13 minimum standard meets all applicable terms of reference, except for the following:

• It is recommended that France introduce a provision which would have an equivalent effect as the “deemed listing provision”, i.e. ensuring that all entities that are not legally required to prepare Consolidated Financial Statements (whether under commercial / company law, or under regulations governing the relevant stock exchange / market, or other) be included in the scope of the parent entity filing obligation.

• It is recommended that France ensure that local filing only occurs in the circumstances contained in the terms of reference (OECD, 2017[2]).

3. France’s 2017/2018 peer review included a recommendation that France take steps to ensure that the appropriate use condition is met ahead of the first exchanges of information. France now has measures in place to ensure the appropriate use of information in all six areas identified in the OECD Guidance on the Appropriate Use of Information contained in CbC Reports (OECD, 2017[4]).The recommendation with respect to appropriate use issued in the 2017/2018 peer review is removed.

Part A: The domestic legal and administrative framework

4. France has rules (primary and secondary laws) that impose and enforce CbC requirements on MNE Groups whose Ultimate Parent Entity is resident for tax purposes in France.

(a) Parent entity filing obligation

5. No changes were identified with respect to the parent entity filing obligation. The recommendation in the 2017/2018 peer review for France to complete the definition of an “Ultimate Parent Entity” in a manner consistent with the terms of reference, by introducing a provision which would have an equivalent effect as the “deemed listing provision” remains in place. France’s 2017/2018 peer review also included three monitoring point on the parent entity filing obligation.

6. France’s 2017/2018 peer review included a monitoring point with respect to the absence of a provision stating that the Ultimate Parent Entity shall not be held by another Constituent Entity that owns directly or indirectly sufficient interest to be considered as an Ultimate Parent Entity. The provision in the French law could trigger an instance of local filing for French entities when there is no requirement to file CbC report on an entity located in another jurisdiction, which would be considered as their Ultimate Parent Entity as per the terms of reference. France confirms that this has been clarified in its internal procedures, so where the primary filing requirement would operate in the same circumstance as a local filing requirement, (i) it is allowed that only one entity is required to file one CbC report which would satisfy the obligation of all reporting entities and (ii) this filing obligation operates as if the CbC report is made available through a Surrogate Parent Entity. France also notes that further the first filing period, no filing entities have provided for CbC reports in duplicity. The monitoring point is therefore removed.

7. France’s 2017/2018 peer review included a monitoring point with respect to the absence in the definition of the Constituent Entities to the mention that a permanent establishment should be separately disclosed as a Constituent Entity in a CbC Report if a separate financial statement for the permanent establishment for financial reporting, regulatory, tax reporting or internal management control purposes is prepared. France indicates that this is how a CbC report should be prepared and included in updated form 2258SD a clarification in this point, by amending the definition Constituent Entity, including a mention that PEs must be distinguished as a Constituent Entity in the CbC Report, if a separate financial statement for financial reporting, regulatory, tax reporting or internal management control purposes is prepared by them. The monitoring point is therefore removed.

8. France’s 2017/2018 peer review included a monitoring point with respect to the application of the guidance on currency fluctuations for MNE Groups whose UPE is located in another jurisdiction, (OECD, 2018[5]) if local filing requirements were applied in respect of a Constituent Entity (which is tax resident in France) of an MNE Group which does not reach the threshold as determined in the jurisdiction of the Ultimate Parent Entity of such Group. France confirms that it will apply this guidance and included in updated form 2258SD a clarification that the agreed threshold for a declarative obligation is EUR 750 million or the near equivalent amount in domestic currency as of January 2015. The monitoring point is therefore removed.

(b) Scope and timing of parent entity filing

9. No changes were identified with respect to the scope and timing of parent entity filing.

(c) Limitation on local filing obligation

10. No changes were identified with respect to the limitation on local filing obligation. The recommendation in the 2017/2018 peer review for France to ensure that local filing only occurs in the circumstances permitted under the minimum standard and to prevent local filing in the absence on an international agreement remains in place. France’s 2017/2018 peer review also included a monitoring point on the limitation on local filing obligation that remains in place.1

(d) Limitation on local filing in case of surrogate filing

11. No changes were identified with respect to the limitation on local filing in case of surrogate filing.

(e) Effective implementation

12. France’s 2017/2018 peer review included a monitoring point relating to the absence of processes in place that would allow France to take appropriate measures in case it is notified by another jurisdiction that such other jurisdiction has reason to believe that an error may have led to incorrect or incomplete information reporting by a Reporting Entity or that there is non-compliance of a Reporting Entity with respect to its obligation to file a CbC report. France indicates that in the event of an anomaly or a filing error, the company will be requested by the tax authorities to file an amending declaration and these corrected CbC reports will be further exchanged with the relevant jurisdictions. In light of the update provided by France, the recommendation on the effective implementation is removed.

Conclusion

13. France’s implementation of the Action 13 minimum standard meets all applicable terms of reference, except for the following:

• It is recommended that France introduce a provision which would have an equivalent effect as the “deemed listing provision”, i.e. ensuring that all entities that are not legally required to prepare Consolidated Financial Statements (whether under commercial / company law, or under regulations governing the relevant stock exchange / market, or other) be included in the scope of the parent entity filing obligation.

• It is recommended that France ensure that local filing only occurs in the circumstances contained in the terms of reference.

Part B: The exchange of information framework

(a) Exchange of information framework

14. As of 31 May 2019, France has 67 bilateral relationships, including those activated under the CbC MCAA and under the EU Council Directive (2016/881/EU). Within the context of its international exchange of information agreements that allow automatic exchange of information, France has taken steps to have Qualifying Competent Authority agreements in effect with jurisdictions of the Inclusive Framework that meet the confidentiality, consistency and appropriate use conditions. Regarding France’s exchange of information framework, no inconsistencies with the terms of reference were identified.

(b) Content of information exchanged

15. France has processes and written procedures in place that are intended to ensure that each of the mandatory fields of information as required in the CbC template are present in the information exchanged. It has provided details in relation to these processes and written procedures.

(c) Completeness of exchanges

16. France has processes and written procedures in place that are intended to ensure that CbC reports are exchanged with all tax jurisdictions listed in Table 1 of a CbC reporting template with which it should exchange information as per the relevant QCAAs. It has provided details in relation to these processes and written procedures.

(d) Timeliness of exchanges

17. France has processes and written procedures in place that are intended to ensure that the information to be exchanged is transmitted to the relevant jurisdictions in accordance with the timelines provided for in the relevant QCAAs and terms of reference. It has provided details in relation to these processes and written procedures.

(e) Temporary suspension of exchange or termination of QCAA

18. France has processes in place that are intended to ensure that a temporary suspension of the exchange of information or termination of a relevant QCAA be carried out only as per the conditions set out in the QCAA. It has provided details in relation to those processes.

(f) Consultation with other Competent Authority before determining systemic failure or significant non-compliance

19. France has processes in place that are intended to ensure that the Competent Authority consults with the other Competent Authority prior to making a determination that there is or has been significant non-compliance with the terms of the relevant QCAA or that the other Competent Authority has caused a systemic failure. It has provided details in relation to those processes.

(g) Format for information exchange

20. France confirms that it uses the OECD XML Schema and User Guide (OECD, 2017[6]) for the international exchange of CbC reports.

(h) Method for transmission

21. France indicates that it uses the Common Transmission System to exchange CbC reports.2

Conclusion

22. France has in place the necessary processes to ensure that the exchange of information is conducted in a manner consistent with the terms of reference relating to the exchange of information framework. France meets all the terms of reference regarding the exchange of information.

Part C: Appropriate use

23. The 2017/2018 peer review included a recommendation that France take steps to ensure that the appropriate use condition (OECD, 2017[4]) is met ahead of the first exchanges of information. Since the 2017/2018 peer review, France has provided details in relation to these measures, enabling it to answer “yes” to the additional questions on appropriate use. In light of the update provided by France the recommendation on appropriate use is removed. There are no concerns to be reported for France in respect of the appropriate use condition.

Conclusion

24. France meets all the terms of reference relating to the appropriate use of CbC reports.

Summary of recommendations on the implementation of Country-by-Country Reporting

 

Aspect of the implementation that should be improved		Recommendation for improvement
Part A	Domestic legal and administrative framework – definition of an Ultimate Parent Entity	It is recommended that France introduce a provision which would have an equivalent effect as the “deemed listing provision”, i.e. ensuring that all entities that are not legally required to prepare Consolidated Financial Statements (whether under commercial / company law, or under regulations governing the relevant stock exchange / market, or other) be included in the scope of the parent entity filing obligation.
Part A	Domestic legal and administrative framework – limitation on local filing obligation	It is recommended that France ensure that local filing only occurs in the circumstances contained in the terms of reference.
Part B	Exchange of information framework	-
Part C	Appropriate use	-

Notes

← 1.  France’s 2017/2018 peer review included a monitoring point with respect to the limitation of local filing to the instances of “Systemic Failure” as defined in paragraph 21 of the terms of reference. France confirms that its legislation implies that the obligations under the CbC MCAA are complied with (in particular the obligation for a prior consultation between Competent Authorities under Section 6 of the CbC MCAA) and will only apply local filing if there is a “Systemic Failure”. This monitoring point remains in place.

← 2.  Countries exchanging under the EU Council Directive (2016/881/EU) use the Common Communication Network (CCN).