FRANCE

BNP Paribas is well-established as the market-leading bank in France, providing comprehensive services to both retail and institutional clients of all sizes, including cash management, international trade services, and support for e-commerce. A strong network of 38 business centres across France is complemented by 1,899 branches. In addition, 28 trade centres, 6 regional dealing centres and a central dealing room for large customers provides a unique degree of local contact. Competence centres in cash management and trade provide specific expertise, advisory services and solution design and delivery. Further capabilities include:

• Extensive card acquiring solutions, including e-commerce, NFC contactless, mobile POS, Lyf pay and PaylIb mobile wallets, Dynamic Currency Change, cross border card acquiring with European reach (12 countries)
• Innovative collection solutions: Marketplace /Collection on Behalf, Virtual Accounts, Alipay Wechat pay wallets, PSD2 payment initiation, SDD electronic mandates
• Comprehensive payment solutions methods, live experimentation of SWIFT gpi initiative,  international payments via blockchain technology, leading instant payments initiative
• Full connectivity offer:  SWIFTnet, Ebics, FTPS, Connexis, local web solutions Netcash and MaBanque Entreprises, secured flows
• SCT Instant payments domestic and cross border (via API!) from France. Note: reachability of the beneficiary is still a key factor.

France uses the euro (EUR).

Source: IMF, International Financial Statistics, June 2021.

• The French central bank is the Banque de France (www.banque-france.fr).
• The Banque de France is a member of the European System of Central Banks (ESCB) and operates certain activities, such as issuing currency, under the authority of the European Central Bank (ECB – www.ecb.europa.eu).

Bank Supervision

• In November 2014, the ECB, via the Single Supervisory Mechanism (SSM), assumed responsibility for supervising the financial stability of banks operating within the euro zone. However, while the ECB has final supervisory authority over all banks operating within the euro zone, it will only directly supervise those banks classified as ‘significant’ under the terms of the SSM (115 significant banking groups have been recognized to date). ‘Less significant’ banks will continue to be supervised by the national supervisory authority, i.e. the ACPR.
• French banks and other credit institutions are also supervised by the Autorité de Contrôle Prudentiel et de Résolution (ACPR – acpr.banque-france.fr).
• The Ministry of Economy and Finance (www.economie.gouv.fr) is responsible for the regulatory regime for banks and insurance companies.
• The Comité Consultatif du Secteur Financier (CCSF) supervises relationships between credit institutions and users (CSSF – www.ccsfin.fr).
• New regulations must first be scrutinised by the Comité Consultatif de la Législation et de la Réglementation Financières (CCLRF – www.tresor.economie.gouv.fr/CCLRF).

• There is no statutory definition of company residence in French law; a company is generally considered resident in France if its place of effective management is located in France.

• Lifting fees are rarely applied on payments between resident and non-resident bank accounts.
• Item-based charges and/or subscription fees are applied on payments between resident and non-resident bank accounts.

Electronic credit transfers are the payment instrument most commonly used by companies to make supplier, payroll and tax payments. Cheques remain popular among consumers and small businesses, although their use is declining rapidly. Direct debits are used by companies to collect regular payments. Card payments, predominantly via debit card, account for over 50% of all cashless payments by volume. Mobile payment schemes such as YouPass, Lydia, Lyf Pay and Apple Pay, are available.

Promoting a cashless society is the cornerstone of the central bank’s National Retail Payments Strategy (2019-2024). The strategy includes incorporating contactless functionality into every payment terminal and strengthening the security of, and confidence in, electronic payments.

Electronic banking services are available from all banks. Domestic companies primarily use SEPA-compliant EBICS protocols. Multinational companies also use the SWIFT for Corporates messaging standards. Transaction and balance reporting, automated end-of-day sweeping, and some transaction initiation services are available on a domestic and cross-border basis.

Online and mobile banking services are provided by all of the country’s banks. The YouPass mobile payment app enables customers to effect contactless payments by holding mobiles over POS terminals. Transactions are secured by the consumer’s existing bank.

• Credit transfers are used by companies to pay salaries and suppliers, to make tax payments via the transfert de données fiscales et comptables procedure) and for treasury payments.
• SEPA credit transfers can be settled via CORE, STEP2 or via correspondent banking networks. STET has plans to migrate SEPA credit transfers (SCTs) from CORE to SEPA.EU. Unlike the current system used by CORE, in SEPA.EU the cycle concept will be replaced by continuous settlement with a prefunding model.
• Approximately 268 banks in France participate in the SEPA credit transfer scheme.
• High-value and urgent domestic and cross-border (within the euro zone) credit transfers can be settled in real time via TARGET2-Banque de France.
• High-value and urgent cross-border credit transfers can also be settled with end-of-day value via the Euro Banking Association's EURO1 system. Fourteen banks in France participate directly in EURO1.
• Cross-border transfers can be made via SWIFT and settled through correspondent banks abroad.
• The European Payment Council’s SCT Inst scheme (a pan-European 24/7 instant payment scheme for SEPA credit transfers) enables the transfer of funds (the maximum threshold value is EUR 100,000) to another account in less than ten seconds. There are 126 participants of the SCT Inst scheme in France.
• The SEPA.EU platform hosts STET’s Instant Payments CSM, which launched alongside the launch of the EPC’s SCT Inst scheme.
• EBA Clearing and Italy’s SIA Group have developed and implemented a pan-European platform for instant EUR payments called RT1. It is fully compliant with the SCT Insts scheme and is in line with the ISO 20022 global messaging standards for instant payments.
• TIPS is a pan-European service for the settlement of instant payments in central bank money. The service enables payment service providers and ACHs with access to TARGET2 to offer fund transfers 24/7, 365 days a year. TIPS is aligned with SCT Insts. It is primarily focused on EUR payments but is technically capable of settling payments denominated in other currencies.

• Direct debits are used for regular payments, such as utility bills.
• SEPA direct debits can be settled on a same-day basis via CORE or STEP2.

• The cheque as a cashless payment instrument is in decline. In 2019, cheque volume and value fell 9.2% and 8.6% respectively to 1,586 million, with a value of EUR 814.52 billion.
• Cheques are truncated into electronic items before being settled on a next-day basis via CORE.
• A small number of cheques cannot be truncated. These, and cheques with a value greater than EUR 5,000, are physically exchanged within four days of presentation.
• Cheques are valid for just six months.
• Negotiable, transferable bills of exchange are also available in France. These are truncated into electronic items before being settled on a five-day cycle via CORE. There are two forms which remain out of the scope of SEPA:
  • The lettre de change relevé (LCR): an electronic trade bill, which is usually discounted to finance trade.
  • The billet à ordre (BOR): a promissory note.

• Card payments, particularly debit cards, are increasingly popular, especially for retail transactions.
• In 2019, debit card payments increased 9.1% and 6.4% respectively in volume and value terms, to 12,561 million, with a value of EUR 521.7 billion. Credit card volume and value increased 15.6% and 10% respectively to 2,047 million transactions, with a value of EUR 87 billion.
• Groupe de Cartes Bancaires (GCB) is France’s national payment card operator. It has 120 member institutions.
• There were 69.1 million debit cards and 15.4 million credit cards in circulation at the end of 2019.
• Most cards issued in France are co-branded with GCB and either MasterCard or Visa.
• American Express and Diners Club credit cards are also available.
• There are also two domestic credit card issuers: Cofinoga and Cetelem.
• Domestic card payments are processed by CORE.
• Contactless card technology is available in France.
• All cards issued are SEPA-compliant with EMV chips.

• There were 52,969 ATMs in France at the end of 2019.
• There were 2.09 million POS terminals in France at the end of 2019.
• All payments are settled via CORE.
• All ATMs and POS terminals are EMV-compliant.

• Electronic wallet schemes are available via reloadable pre-paid cards.
• Mobile payment schemes such as YouPass, Lydia, Lyf Pay, Samsung Pay and Apple Pay are available and increasingly popular.
• In 2020 Societe Generale partnered with Apple Pay to launch an instant digital card. This ‘virtual’ payment card can be issued on a permanent or temporary basis.
• E-money payments are settled via CORE.

• Domestic notional cash pools using interest optimisation are available, although they  can be expensive to operate in France because of the restrictions on banks offsetting credit and debit balances. Cross-guarantees are required by banks to allow them to offset balances. However, they can be difficult to obtain in France because of their legal uncertainty.
• Some banks also offer a quasi-notional cash pooling structure using mirror accounts.

• Domestic cash concentration structures are widely available.
• One participant entity must demonstrate effective control of all other participants and all participants must share the same beneficial ownership. The terms and conditions covering the operation of the structure (convention de trésorerie) must be formally authorised by the board (conseil d’administration). The structure must operate at arm’s length and provide clear benefit to all participants. 
• Resident and non-resident bank accounts can participate in the same cash concentration structure. Withholding tax may be applied to interest payments to non-residents.
• Central bank reporting requirements may apply.

• Although interest optimisation notional cash pooling is available, cross-border notional cash pools are not usually based in France because of the restrictions on banks offsetting credit and debit balances. Cross-guarantees are required and can be expensive and difficult to obtain in France.

• Central treasury units (centrales de trésorerie) can be established in France to manage international treasury operations for multinational organisations. Under the terms of a central treasury unit, interest expenses on intra-group financing are fully deductible and no withholding taxes are levied on interest paid to any non-resident participant.
• Cross-border cash concentration is also available outside the central treasury unit structure.
• Central bank reporting may apply, lifting fees may be payable on transfers between resident and non-resident accounts and withholding tax may be applied on interest payments to non-residents.
• French resident entities are also permitted to participate in cash concentration structures where the header account is located outside France.

Interest payable on credit balances

• Interest-bearing current accounts are available.

Demand deposits

• Demand deposits are available in EUR or major foreign currencies.

Time deposits

• Time deposits are available in EUR or major foreign currencies for terms ranging from one week to one year.

Certificates of deposit (CD)

• Domestic banks issue certificates of deposits (CDs) with terms ranging from overnight to 12 months. Terms of three and six months are most common.
• CDs can be issued paying fixed or variable interest. 
• The minimum investment is EUR 150,000.

Treasury (government) bills

• The French sovereign debt management agency (Agence France Trésor) issues treasury bills (bons du Trésor).
• Short-term treasury bills are issued at a discount for terms up to one year. These are known as BTFs (bons du Trésor à taux fixe).

Commercial paper

• Domestic commercial paper is issued by companies and public authorities. Most paper (billet de trésorerie – BT) is issued for a month, although terms ranging from overnight to 12 months are permitted.
• Euro commercial paper (ECP) is issued by larger companies with a published credit rating. ECP can be issued in a range of currencies.

Money market funds

• Domestic money market funds (organismes de placement collectif en valeurs mobilières - OPCVMs) are popular short-term investment instruments.
• There are two main forms of OPCVMs:
  • SICAVs (société d’investissement à capital variable) are open-ended investment funds, required to publish their net asset value daily; and
  • Investors in FCPs (fond commun de placement) co-own assets bought by the fund, similar to a unit trust.
• OPCVMs are permitted to invest in many types of instrument, including money market instruments, bonds and equities.
• International money market funds are also available to French investors.

Repurchase agreements (repos)

• Repurchase agreements with maturities ranging from overnight to one week are commonly available in France. Longer terms are sometimes available.

Bankers’ acceptances

• These are not used in France.

• As a member of the EU, France follows the EU customs code and applies all associated regulations and commercial policies.
• Trade with countries in the European Economic Area (EEA) and Switzerland is exempt from tariffs and other controls.

• The EU has trade agreements in place with over 30 countries.
• The EU is currently in free trade negotiations with a number of countries, including the Association of Southeast Asian Nations (ASEAN), Australia, Indonesia, Mercosur (the Southern Common Market), Uruguay, and the USA. The EU-UK Trade and Cooperation Agreement entered into force on 1 May 2021.

Source: IMF, International Financial Statistics, June 2021.

• Documentation is not required for imports from within the EU, although a commercial invoice should be supplied.
• The following documentation is usually required in order to import goods into France from outside the EU:
  • customs declaration
  • commercial invoice
  • bill of lading
  • packing list
  • certificate of origin (in certain cases).

• Import licences are required for specific products and for items from certain countries.
• Import licences are required for items with quantitative restrictions from outside the EU and for items from within the EU that are deemed to be of national interest or of a strategic nature.
• Various imports from outside the EU require administrative visas from the relevant ministry or the customs authorities. These visas are required for imports from outside the European Coal and Steel Community (ECSC) which are listed in the ECSC Treaty.

• Tariffs are set according to the EU customs code for all imports from outside the EU, with higher tariffs for agricultural imports.
• There are currently two free zones (the Free Zone of Verdon – Port de Bordeaux and the Free Zone of French Guyana) operating in France.

• None 

• None 

• France prohibits the import of certain items in line with EU regulations and UN Security Council resolutions.
• Specific imports are prohibited in order to protect fauna and flora, for health and safety or moral reasons, and/or for national security.

• Documentation is not required for exports from within the EU, although a commercial invoice should be supplied.
• The following documentation is usually required in order to export goods from France outside the EU:
  • customs declaration
  • commercial invoice
  • bill of lading
  • packing list
  • certificate of origin (in certain cases).

• Licences are not required for most exports. In some instances, prohibited items can be exported under a special licence.

• None

• None 

• France has implemented the EU directive on export credit insurance.
• Compagnie Française d’Assurance pour le Commerce Extérieur (Coface), France’s national export credit agency, provides state-supported export credit insurance in conjunction with the Ministry of Economy and Finance.
• Export credit insurance is also available from private insurance companies.
• Coface finances exports from its own account and on the state’s behalf. Export financing is also available privately from commercial banks.

• France prohibits the export of certain items in line with EU regulations and UN Security Council resolutions.

• Transactions between resident accounts and accounts held by non-residents within SEPA do not need reporting.
• As of January 1, 2019, all transactions, including transactions between residents and non-residents from SEPA countries, above EUR 50,000 must be reported to the Banque de France on a monthly basis.
• The assets and liabilities of approximately 100 resident banks in relation to non-residents are reported on a quarterly basis.
• All other transactions between resident accounts and accounts held by non-residents must be reported on an annual basis.

• France has been a member of the eurozone since 1 January 1999. 
• Restrictions apply to investors from non-EU states establishing branches of an insurance company or agricultural business, or acquiring a vineyard.
• Investors from non-EU states cannot acquire control of French airlines or French flagged ships.

• A company incorporated in France is deemed a tax resident. A foreign company is considered resident if it is managed and controlled in France.

• None

• None

• None

• Rulings are becoming a regular practice. A special ruling procedure exists to confirm whether a foreign entity has a PE in France.

• Capital gains from the disposal of movable assets (e.g. securities, bonds) are subject to a 30% tax rate (i.e. 12.8% income tax and 17.2% social contribution). Capital gains from the disposal of immovable property are taxed a special flat rate of 19%, plus special social security surcharges..

• Withholding tax applies to dividends, royalties and payments to non-resident companies for services rendered in France.
• Dividends paid  by a French corporation to a non-resident shareholder are subject to a 26.5% withholding tax (reduced from 28% in 2020), unless a tax treaty provides for a lower rate or the EU parent-subsidiary directive applies. Under the directive, dividends paid by a French corporation to a qualifying EU parent company are exempt from withholding tax. The 26.5% rate should be reduced to 25% in 2022, in line with the reduction in the standard corporate tax rate.
• Royalties paid to a non-resident entity are subject to the corporate income standard tax rate of 26.5%, regardless of the entity’s annual income. The rate may be reduced or eliminated under a tax treaty or where the royalties qualify for the benefit of the EU interest and royalties directive. The rate should be reduced to 25% in 2022, in line with the reduction in the standard corporate tax rate.
• The branch remittance tax should be reduced to 25% in 2022, in line with the reduction in the standard corporate tax rate.

• France has exchange of information relationships with 144 jurisdictions through 115 double tax treaties and 29 TIEAs (www.eoi-tax.org,).
• France, as part of the OECD/G20 Base Erosion and Profit Shift (BEPS) initiative, has signed a multilateral co-operation agreement with 30 other countries (“the MCAA”). Under this multilateral agreement, information is exchanged between tax administrations, giving them a single, global picture on some key indicators of economic activity within multinational enterprises (MNE).
• With Country-by-Country reporting tax administrations of jurisdictions where a company operates have aggregate information annually relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE group. It also covers information about which entities do business in a particular jurisdiction and the business activities each entity engages in. The information is collected by the country of residence of the MNE group, and then exchanged through exchange of information supported by such agreements as the MCAA.

• Interest expense deduction limitation rules apply in line with the EU Anti-Tax Avoidance Directive (ATAD 1). Net borrowing costs (“exceeding borrowing costs”), such as interest expense, guarantee costs or foreign exchange losses on borrowings, are deductible only up to the greater of 30% of the tax EBITDA (i.e. earnings before, interest, tax, depreciation and amortisation, restated with tax exempt income) or EUR 3 million.
• For companies that are considered to be thinly capitalised, (i.e. where the related party debt-to-equity ratio exceeds 1:5), the portion of deductible financial expenses will be determined based on the application of two sets of rules:
  • External debt: The standard 30% EBITDA test will apply to the portion of interest deemed to derive from external debt, calculated as total interest multiplied by the amounts put at the disposal of the company by unrelated parties increased by 1.5 x equity/total amounts put at the disposal of the company.
  • Related party debt: Interest on related party debt will be subject to stricter rules, with a 10% of tax EBITDA limitation applying to interest expense deemed to derive from related party debt, calculated as total interest multiplied by the amounts out at the disposal of the company by related parties/total amounts put at the disposal of the company.
• Financial expenses that are deemed to be non-deductible based on the external debt rule may be carried forward indefinitely to be deducted in a subsequent financial year. However, only one-third of financial expenses that are deemed to be non-deductible based on the related party debt basis rule may be carried forward.
• A specific safeguard clause applies to consolidated groups for financial accounting purposes, whereby the reinforced mechanism provided for in the case of thin capitalisation will not apply if the company can demonstrate that the debt ration of the consolidated group to which it belongs, is higher than or equal to its own debt ratio. In that case, the company will continue to benefit from the application of the standard thresholds (i.e. 30% of the tax EBITDA or EUR 3 million), as well as from the general safeguard clause allowing an additional deduction (if certain conditions are fulfilled)..

• French entities controlled by entities established outside France are taxable in France on profits transferred, directly or indirectly, to the entity located abroad through an increase or decrease in the purchase or sales prices or by any other means. Companies exceeding certain thresholds must maintain contemporaneous transfer pricing documentation.
• Rates on interest paid by French corporate taxpayers to related parties are deemed to be arm’s length if they do not exceed an index corresponding to the average annual floating rate applied by banks to two-year loans granted to businesses. If the interest rate exceeds that index, the taxpayer will have to demonstrate that it would have paid a similar or higher rate to a bank in a comparable situation.

• Stamp duties apply, but they are nominal.
• No stamp duty is levied on loan agreements.

• A French company entering into a cash pooling agreement is not subject to thin capitalisation rules in relation to the deduction of interest incurred to finance the cash pool. Other participants to the cash pooling arrangements are subject to thin capitalisation rules on interest remitted to the French company holding the cash pool header acount.

• A financial transaction tax at 0.3% applies to transactions involving shares of publicly traded companies established in France, the capital of which exceeds EUR 1 billion. The tax is calculated based on the value of the shares.

All tax information supplied by Deloitte Touche Tohmatsu and Deloitte Highlight 2021 (www.deloitte.com).