France: CbC reporting; transitional measure - KPMG Global
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France: Country-by-country reporting; transitional measure announced by French tax authorities

France: CbC reporting; transitional measure

France has instituted a country-by-country (CbC) reporting system, as codified under Article 223 quinquies C of the French tax law—pursuant to the 2015 final recommendations report on Action 13 of the OECD’s base erosion and profit shifting (BEPS) project.


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Article 223 quinquies C provides that French subsidiaries or branches of parent companies located in countries or territories that have not made the filing of such a document compulsory, or that have not entered into an agreement allowing automatic exchange of information with France, are required to file the CbC report locally unless they can demonstrate that another entity of the group, located in a country or territory meeting the conditions, was designated to file the declaration. 

Implications for U.S. companies

The United States and France have not yet signed an agreement providing for the automatic exchange of CbC reports, and as a result, ongoing questions have been raised as to whether the subsidiaries of U.S. groups must file a (secondary) CbC report in France or whether a surrogate entity needs to be designated. In the past, tax professionals in France have taken the position that entities are not to declare or file the CbC report in France—read TaxNewsFlash. This position has been officially confirmed by French officials and the IRS.

In accordance with the OECD recommendation, the French tax authorities officially announced in a communication (5 December 2017) a transition measure to address a situation when French companies/branches are held by an ultimate parent company located in a country which has not implemented CbC regulations or the international exchange of information relationships that are formed through “qualifying competent authority agreements” (QCAAs) with France. Further to this measure, if a parent company located in such a country or territory voluntarily files a CbC report for a fiscal year beginning from 1 January 2016, in accordance with the international standard, and that CbC report is transmitted by the foreign tax administration to the French competent authority, the subsidiaries or branches located in France will not be subject to the CbC reporting obligation.

The transitional measure will apply for French subsidiaries or branches of U.S. groups. CbC reports with respect to fiscal years beginning in 2016 will be spontaneously exchanged. 

  • The IRS will voluntarily exchange the CbC report (returns) filed by U.S. companies with France, based on the provision of the France-United States income tax treaty. This treatment is reflected in a footnote that the IRS added on 13 December 2017 to the “Country-by-Country Reporting Jurisdiction Status Table.”
  • The French tax authorities will reciprocally provide the IRS with the CbC reports filed in France by French parent companies having U.S. entities. 

KPMG observation

This communication is viewed as illustrating the will of the French tax authorities to define and implement pragmatic solutions complying with the OECD recommendation pertaining to CbC reporting.

The details of the practical implementation of the exchanges are a matter for the competent authorities of the countries and are expected to be resolved shortly. Tax professionals with Fidal* have noted there are reports that France and the United States are currently working on measures to allow for the exchange of CbC reports between these two countries as from January 2018. 


For more information, contact a tax professional with Fidal* in France or with KPMG in the United States:

Nadia Sabin | +33 1 55 68 17 38 | 

Patrick Seroin | +1 (212) 954-2523 |

* Fidal is a French law firm that is independent from KPMG and its member firms.

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