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4. Results: Answers
Corporate Tax
6.
Compliance
6.1
What are the deadlines for filing company tax returns and paying the relevant tax?
France

Answer ... Corporate entities must file their corporate tax return online.

The declaration (Form 2065-SD), together with its appendices, must be filed either:

  • on the second business day following 1 May if the financial year is the same as the calendar year (in practice, the filing deadline is extended to mid-May for declarations filed online); or
  • within three months of the financial year end, if different from 31 December.

Corporate tax must be spontaneously calculated and paid. Payment is made in instalments (Form 2571-SD) and balance (Form 2572-SD) statements that are filed electronically. Instalments of French corporate tax are payable on a quarterly basis (by 15 March, 15 June, 15 September and 15 December).

In the event of a tax audit, corporate entities must be able to provide the French Tax Administration with an e-file that complies with French accounting standards and the French chart of accounts issued by their accounting software.

Value added tax (VAT) returns must be filed electronically and VAT must be paid:

  • monthly (for most corporate entities); or
  • quarterly, if the annual VAT amount to be paid is less than €4,000.

Groups of companies which are managed by the tax office in charge of large companies can opt to constitute a VAT group under certain conditions. Once this option is in force, all VAT liabilities due and input VAT (VAT credit) held by group members are compensated within the group. However, each member must submit its own VAT return for information purposes. The parent company must file and pay the overall net VAT by the 24th of the following month at the latest.

Corporate entities must file a return for the corporate property contribution (CFE) on the second business day following 1 May if there is any change in the CFE tax base. The CFE is due on the deadline stated in the tax notice sent by the French Tax Administration.

The business value-added contribution (CVAE) form must be filed by the second business day following 1 May. An initial 50% instalment of the CVAE (Form 1329 AC) must be paid spontaneously by 15 June at the latest and a second 50% instalment by 15 September at the latest if the corporate entity was liable for CVAE exceeding €3,000 the preceding year. The balance (if any) must be paid the following year on the second business day following 1 May at the latest (Form 1329-DEF).

Transfer tax is generally payable in the month following that of the transfer.

For more information about this answer please contact: Eglantine Lioret from Pinsent Masons LLP
6.2
What penalties exist for non-compliance, at corporate and executive level?
France

Answer ... In the event of a tax audit, failure to comply with the filing obligations triggers a fine of €5,000 per audited year or a 10% penalty based on the tax reassessments at the end of the tax audit, if higher. Moreover, the French Tax Administration may consider either that there was opposition to submitting the tax return or that the books are not compliant with French accounting standards. In either case the books will be rejected and the French Tax Administration may reassess the corporate entity’s profits and turnover itself. In such case, a 100% penalty will be added to the tax reassessment. The corporate entity will then bear the burden of proving that the tax reassessment is incorrect.

Corporate entities that do not comply with the obligation to issue an invoice are liable to a tax penalty of 50% of the amount of the transaction (which may be reduced to 5% in certain circumstances). Any omission or inaccuracy found in invoices required for the purposes of value added tax (VAT) deductions give rise to the application of a fine of €15 (without exceeding 25% of the invoiced amount for each invoice or document).

Late filings of returns (corporate tax, VAT, transfer tax) will trigger:

  • a 10% penalty on the tax due;
  • a 40% penalty in the event of non-compliance 30 days after receipt of the filing request; and
  • an 80% penalty in the event of the discovery of a hidden activity.

In addition, if the return filed by the corporate entity is inaccurate, the French Tax Administration may apply a 40% penalty on the reassessed tax (in case of bad faith) or an 80% penalty if the French Tax Administration concludes that there has been fraudulent behaviour or an abuse of the law.

A late payment of tax triggers late payment interest at 0.2% per month. In addition, a 5% penalty is applicable on the corporate income tax, CVAE contribution, VAT or transfer tax due.

Non-compliance with the requirements on electronic filings or the electronic payment of taxes is sanctioned by a 0.2% increase in the tax due.

The directors of corporate entities can be declared jointly liable for company taxes and penalties if their fraudulent behaviour or serious and repeated failure to observe tax obligations has made it impossible to recover taxes and penalties from the company. They can also be fined for failure to prepare the annual accounts and the management report.

Some penalties can be very high. Corporate entities should file a specific tax return for each beneficiary (individual or legal person) that receives passive income from them, such as interest, dividends, directors’ fees, advances, any instalments and loans. Any failure to declare, delay, omissions or inaccurate information will trigger the application of financial penalties, which could be significant – for example, a fine of up to 50% of the non-reported amount or, in the event of late filing, a €150 fine per late return.

Since the publication of Law 2018-727, in certain situations, if a corporate entity has not spontaneously regularised its situation, the French Tax Administration will invite it to do so within a specified timeframe before it imposes a penalty. This procedure is limited to the first involuntary infringement of the applicable rules and for mistakes that may be regularised.

For more information about this answer please contact: Eglantine Lioret from Pinsent Masons LLP
6.3
Is there a regime for reporting information at an international or other supranational level (eg, country-by-country reporting)?
France

Answer ... In accordance with Action 13 of the Base Erosion and Profit Shifting initiative led by the Organisation for Economic Cooperation and Development, companies that carry out activities in France and whose global and consolidated turnover is more than €750 million must file a country-by country declaration, setting out information on:

  • the activities and location of activity of group entities; and
  • profit splitting among these entities.

Since 2017, a reporting requirement on the automatic exchange of financial account information in tax matters has applied pursuant to the application of the Directive on Administrative Cooperation, which made the exchange of information mandatory for all EU member states. If the clients of financial institutions are tax resident in a foreign jurisdiction that has agreed to the automatic exchange of information, certain information must be reported to the tax authority of the country in which the account is maintained, which will transmit this information to the tax authority of the account holder’s country of tax residence. Financial institutions must report the following information:

  • account balances;
  • revenue from financial assets; and
  • gross proceeds from the sale of financial assets.

This reporting requirement applies to depositary accounts, custodial accounts, cash value insurance contracts, annuity contracts and equity and debt interests in financial institutions.

Financial institutions are prohibited from contracting with clients that have not provided a self-certification specifying their tax residence and tax identification number.

They are also required to report to the French Tax Administration a list of clients that failed to provide information on their tax residence and their tax identification number (where those clients were required to provide a self-certification) within 30 days of the French financial institution sending a second request for information under the US Foreign Account Tax Compliance Act.

Financial institutions must keep all information and documentation supporting identification due diligence regarding accounts and payments until the end of the fifth year following that in which the reporting is submitted to the French Tax Administration.

For more information about this answer please contact: Eglantine Lioret from Pinsent Masons LLP
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Topic
Corporate Tax