FRANCE

Introduction to FRANCE

France is a major medium-sized economy, the seventh largest economy in the world (2017) in nominal GDP terms. On a PPP (purchasing power parity) per capita basis, it ranks 23th. France is the second largest country in the Eurozone, representing about 20% of the region’s GDP. France’s economy is strongly focused on tertiary industry, with services representing 79% of total gross value added while the share of secondary industry is only 14%. Agriculture counts for 1.7% and the construction sector for 6%. For comparison purposes, these figures for the EU as a whole are 74%, 19%, 1.5% and 5% respectively.

As a result of this economic structure, and also because of the scale of its welfare state, France is not a highly cyclical economy: if it suffers from less severe recessions than elsewhere, it nevertheless also benefits from less vigorous recoveries. In addition, French growth has been trending downwards over a long period: average annual growth has declined from about 5% in the 1950s and 1960, to 4% in the 1970s, 2% in the 1980s and 1990s, before dropping to 1.4% since the early 2000s.

From 2014 to 2016, the recovery was sluggish, with annual average growth no higher than 1%, before gaining traction, running, on average, at a close to 3% rate on an annualized basis from Q4, 2016 to Q4, 2017. This strong pace helped raise 2017 growth to 2.3% in annual average terms (and adjusted for working days), the fastest growth rate since 2007. However, this strong momentum has been followed by a sudden soft patch in the first half of 2018, the result of a mix of temporary, exogenous and cyclical factors. Despite moderating, growth still looks solid and above forecasts. Downside risks are mounting however, largely fuelled by a more uncertain external environment and, to a lesser extent, by a less supportive domestic situation.

Efforts continue to address structural weaknesses, such as lack of competitiveness, large-scale unemployment and deep fiscal imbalances. A number of reforms have been launched since 2007 to try and boost the supply side in order to revive the economy. This strategy has been reinforced since 2012 with a series of corporate tax and employer contribution cuts, coupled with various efforts to introduce more competition in the goods and services market, add flexibility in the labour market, support innovation, increase financing to SMEs and build a more business-friendly environment.

These reforms are being continued and somewhat amplified by President Macron’s appointment. They should all bear fruit over the long term, helping raise French potential growth by a few-tenths from its current estimate of 1.2%. Such reforms have already contributed to two improvements: France’s macroeconomic imbalances are no longer considered to be excessive by the European Commission and France finally exitedthe excessive deficit procedure in 2018. France must capitalise on its numerous resources to facilitate growth e.g. its geography, demographics, infrastructure, diversified economy, deep and liquid capital and credit markets, abundant private savings, energy, culture, creativity, attractiveness, skills, know-how, and world leading companies.

Summary

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 and international trade services. A strong network of 28 business centres across France is complemented by more than 2,150 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.

France is a 'home' market for BNP Paribas, and the country in which the bank has the strongest domestic presence. As a major European market, clients value the comprehensive range of services that the bank offers in France to manage their in-country, regional and global cash management and trade finance needs. BNP Paribas offers a client-centric service model with both relationship and product management locally.

As the market leader in France, the bank is committed to pioneering innovations that both inspire and support clients' strategic ambitions. For example, BNP Paribas has been a leader in supporting migration to new payments and standards such as SEPA and XML, channels such as SWIFT for corporates and EBICS, and associated tools such as 3SKey.

The bank continues to drive innovations in areas such as eCommerce, mobile payments and commercial cards. The bank provides innovative collection solutions (e.g. Compusafe for cash collections and NFC contactless payments) and offers extensive card payment and card acquiring solutions, including e-commerce interface. These are supplemented with flexible lockbox solutions and a market-leading virtual accounts offering.

BNP Paribas offers the full range of traditional trade finance products (documentary operations, international guarantees and trade financing) in France as well as structured trade and customised supply chain management solutions. BNP Paribas documentary operations platform in France is ISO certified. The bank often introduces new products and services first in France before rolling out more widely across our network, giving clients in France a unique opportunity to leverage innovations quickly and create competitive advantage.

 

Currency

France uses the euro (EUR).

 

2013

2014

2015

2016

2017

Exchange rate:
EUR per USD

0.7532

0.7537

0.9017

0.9040

0.8873

Source: IMF, International Financial Statistics, August 2018.

  • 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 accounts

  • 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.
Inside FranceOutside Eurozone
Local Currency

Permitted without restriction, fully convertible.

Permitted without restriction, fully convertible.

Foreign Currency

Permitted without restriction, fully convertible.

Permitted without restriction, fully convertible.

Inside FranceOutside Eurozone
Local Currency

Permitted without restriction, fully convertible.

Permitted without restriction, fully convertible.

Foreign Currency

Permitted without restriction, fully convertible.

  • Not applicable 
  • 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.
  • There is no difference in the process for opening resident and non-resident accounts in France. Payments between resident and non-resident accounts with BNP Paribas are treated as domestic payments, avoiding cross-border charges. France has a standardised approach to account opening and management, with the ability to use digital signatures in many cases.

BNP Paribas Cash Management Capabilities

Physical cash poolingChecked
Notional poolingChecked
CheckedSupported by BNP Paribas
Not checkedNot required / permitted in FRANCE or not supported by BNP Paribas
Cash collectionsChecked
Cheque collectionsChecked
Direct debit collectionsChecked
Domestic incoming transfersChecked
International incoming transfersChecked
Card acquiringChecked
CheckedSupported by BNP Paribas
Not checkedNot required / permitted in FRANCE or not supported by BNP Paribas
Cash withdrawalsChecked
Cheque paymentsChecked
Direct debit paymentsChecked
Domestic outgoing transfersChecked
International outgoing transfersChecked
Card issuingChecked
CheckedSupported by BNP Paribas
Not checkedNot required / permitted in FRANCE or not supported by BNP Paribas
Local e-BankingChecked
Global e-Banking - ConnexisChecked
SWIFTNet / Global host to hostChecked
CheckedSupported by BNP Paribas
Not checkedNot required / permitted in FRANCE or not supported by BNP Paribas

Payments & Collections

  • France has a mature payments and cash management environment, including both paper and electronic-based payment instruments.
  • Although the use of cheques is declining, they still comprise a significant proportion of payments, so companies operating in France need to be in a position to accept and process cheques efficiently, in addition to electronic instruments and cards.
  • There are also a variety of local instruments still in use in addition to SEPA instruments, such as commercial bills, which again companies need to be in a position to manage, and often provide advantage in terms of collection and supply chain enablement.
TARGET2 - BANQUE DE FRANCEType
  • Real-time gross settlement.
  • French component of the pan-European TARGET2 system.
 Participants
  • 141 direct, 185 indirect.
 Transaction types processed
  • High-value and urgent EUR-denominated domestic and cross-border credit transfers.
  • Net obligations from CORE.
 Operating hours
  • 06:45-18:30 CET, Monday to Friday.
 Clearing cycle details(e.g. cut-off times)
  • Payments cleared and settled in real time.
  • Interbank payment cut-off time = 18:00 CET.
 System holidays
  • TARGET2 is closed weekends and 1 January, Good Friday, Easter Monday, 1 May, 25, 26 December.
 CORE Type
  PARTICIPANTS
  • 10 direct, 150 indirect.
  TRANSACTION TYPES PROCESSED
  • Domestic and cross-border payments.
  • SEPA payments (credit transfers and direct debits).
  • Paper-based payments (cheques, bills of exchange) which must be truncated into electronic items before processing.
  • Payment card transactions.
  OPERATING HOURS
  • 24 hours a day, Monday to Friday.
  • CORE closes at 14:00 CET, Saturday.
  CLEARING CYCLE DETAILS (eg cut-off times)
  • CORE operates a number of clearing cycles for different payment types.
  • Credit transfers, direct debits, card payments and ATM withdrawals are settled on a same-day basis. Cut-off time = 13:30 CET
  • Cheques are settled on a next-day basis. Cut-off time = 18:30 CET.
  • Electronic bills of exchange and promissory notes (LCRs and BORs) are settled on a five-day cycle. Cut-off time = 18:30 CET.
  SYSTEM HOLIDAYS
  • CORE is closed on all French bank holidays.
  • French bank holidays are:
  • 2nd half 2018: 14 July, 15 August, 1, 11 November, 25, 26 December.
  • 2019: 1 January, 19, 22 April, 1, 8, 30 May, 14 July, 15 August, 1, 11 November, 25, 26 December.

 

Transactions (millions)

% change

Value (EUR billion)

% change

 

2015

2016

2016/2015

2015

2016

2016/2015

Cheques

2,311.5

2,137.5

- 7.5

1,172.8

1,077.3

- 8.1

Card payments

10,234.0

10,997.0

7.4

469.8

492.1

4.8

Credit transfers

3,621.1

3,752.9

3.6

23,370.0

23,696.8

1.4

Direct debits

3,879.1

3,962.6

2.2

1,451.2

1,492.1

2.8

Card-based e-money

36.4

38.1

4.7

0.4

0.6

50.0

Other

72.5

19.9

- 72.6

356.5

0.8

- 99.8

TOTAL

20,154.6

20,908.0

3.7

26,820.7

26,759.7

- 0.2

  • 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.
  • Approximately 287 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.
  • In November 2017, the European Payment Council’s SCTInt scheme (a pan-European 24/7 instant payment scheme for SEPA credit transfers) went live across all SEPA countries. The scheme enables the transfer of funds (the maximum threshold value for SCTInsts will be EUR 15,000) to another account in less than ten seconds. The scheme is available in France. STET has announced plans to introduce an optional instant payment settlement service called CSM (Clearing and Settlement Mechanism) Instant Payment. The service is based on the European Payment Council’s SCTInt scheme and will be incorporated into SEPA.EU. It is expected to launch in November 2018.
  • 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.
  •  

  • 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.
  • In 2017, the duration of the validity of cheques was reduced to six months, from one year.
  • 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 are increasingly popular, especially for retail transactions.
  • Groupe de Cartes Bancaires (GCB) is France’s national payment card operator. It has 120 member institutions.
  • There were 59.2 million debit cards and 19.7 million credit cards in circulation at the end of 2016.
  • 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 58,480 ATMs in France at the end of 2016.
  • There were 1.49 million POS terminals in France at the end of 2016.
  • All payments are settled via CORE.
  • All ATMs and POS terminals are EMV-compliant.
  • The dominant electronic wallet scheme, Moneo, has been incorporated into French payment cards. Over three million payment cards have the multipurpose Moneo reloadable e-purse function.  
  • There were 2.7 million cards with an e-purse function in circulation at the end of 2016.
  • Mobile payment schemes such as YouPass and Apple Pay, are available.
  • In May 2017, BNP Paribas and France’s retail group Carrefour launched Lyf Pay, a new QR code-based mobile wallet allowing customers to make in-store, online and peer-to-peer (P2P) mobile transactions as well as loyalty cards, coupons and offers. Other participants in the scheme include MasterCard, Crédit Mutuel, Auchan, Oney and Total.
  • E-money payments are settled via CORE.
  • As the leading bank in France, BNP Paribas provides a full range of domestic and cross-border payment solutions, with unlimited payments and collections processing capabilities.
  • The bank has a web-based cash collection system (Forecast) for monitoring cash pickup and ordering cash collection at a point of sale or store level securely. Cash is posted to customer accounts on collection, enabling same-day value, as opposed to posting once cash has been received and counted in the branch. Similarly, the bank offers cheque collection and electronic conversion of remittance data for efficient processing.

Electronic banking

  • Electronic banking services are available from all banks.
  • Domestic companies primarily use SEPA-compliant EBICS (Electronic Banking Internet Communication Standard) protocols which have replaced the previous ETEBAC standards.
  • 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.
  • The French banking industry uses an electronic certificate (Referential General de Securité – RGS) to authenticate electronic signatures.
  • 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.
  • In addition to BNP Paribas' international portfolio of electronic banking channels, the bank also supports specific electronic banking solutions in France such as EBICS and proprietary domestic channels such as BNPNet and Netcash.

Liquidity management

  • Domestic notional cash pools 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 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.
  • 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.
  • There are no specific complexities associated with domestic cash pooling in France; however, please contact your BNP Paribas relationship manager to discuss regional and global liquidity management.

Short term investments

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.
  • Please contact your BNP Paribas relationship manager for support and guidance on liquidity management.

BNP Paribas Trade Finance Capabilities

Documentary creditsChecked
Documentary collectionsChecked
CheckedSupported by BNP Paribas
Not checkedNot required / permitted in FRANCE or not supported by BNP Paribas
Bank guaranteesChecked
Standby letters of creditChecked
CheckedSupported by BNP Paribas
Not checkedNot required / permitted in FRANCE or not supported by BNP Paribas
ReceivablesChecked
PayablesChecked
InventoryChecked
CheckedSupported by BNP Paribas
Not checkedNot required / permitted in FRANCE or not supported by BNP Paribas
Connexis TradeChecked
Connexis Supply ChainChecked
SWIFTNet Trade for CorporatesChecked
Connexis ConnectChecked
CheckedSupported by BNP Paribas
Not checkedNot required / permitted in FRANCE or not supported by BNP Paribas

International trade

  • 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 a customs union with Andorra, San Marino and Turkey and has established trade agreements with over 50 partners, including European Free Trade Association (EFTA) member states, Albania, Armenia, Bosnia and Herzegovina, Canada, the Faroe Islands, Georgia, Macedonia, Moldova, Montenegro and Serbia, in addition to Algeria, Chile, Egypt, Israel, Jordan, Lebanon, Mexico, Morocco, Palestine, South Africa, Singapore, South Korea, Syria, Tunisia and Ukraine.
  • The EU is currently in free trade negotiations with a number of countries, including the Association of Southeast Asian Nations (ASEAN), the Gulf Cooperation Council (GCC), India, Japan,  Mercosur (the Southern Common Marketand Myanmar.

Imports

Machinery and equipment

 

Vehicles

Crude oil

Aircraft

Plastics

Chemicals

 

 

Primary Import sources

Germany (18.5%)

Belgium (10.2%)

Netherlands (8.3%)

Italy (7.9%)

Spain       (7.1%)

UK

 (5.3%)

 US   (5.2%)

China

(5.1%)

Exports

Machinery and transport equipment

 

Aircraft

Plastics

Chemicals

Pharmaceutical products

Iron and steel

Beverages

 

Export markets

Germany (14.8%)

Spain (7.7%)

Italy (7.5%)

USA (7.2%)

  Belgium           (7.0%)

UK (6.7%)

 

 

 

2013

2014

2015

2016

2017

Exports

- goods    USD bn

582

581

522

521

554

 

- services USD bn

254

275

255

260

276

Imports

- goods    USD bn

639

636

554

559

608

 

- services USD bn

228

252

233

240

146

Current account as % GDP      

– 0.8

– 1.0

– 0.4

– 0.8

– 0.5

Source: IMF, International Financial Statistics, August 2018.

Trade finance - imports

  • 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.

Trade finance - exports

  • 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.

Regulatory requirements

  • Transactions between resident accounts and accounts held by non-residents within SEPA do not need reporting.
  • Transactions with a value above EUR 50,000 between resident accounts and accounts held by non-residents from outside SEPA must be reported 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.
  • France has enacted anti-money laundering legislation, including legislation implementing the first four EU anti-money laundering directives and counter-terrorist financing legislation. (Act No 90-614 of 1990, as supplemented by several legislative instruments, most recently Act No. 2004-130 of 2004; Act No. 2004-204 of 2004; Decree No. 2006-736 of 2006 ; Law No. 2008-776 of 2008 ; Decree No. 2009-874 ; Decree No. 2009-1087 ; Decree No. 2012-1125 ; Law No. 2013-100 of 2013, Law No. 2016-731, Decree No. 2013-183 and Decree No. 2017-1094.)   The Banque de France and the Financial Market Authority have also issued related Guidelines and Regulations, which are regularly updated. The 4th EU anti-money laundering directive has been transposed into French law by Order No. 2016-1635, with provisions to come into force from June 2017 to April 2018.  
  • As a Financial Action Task Force (FATF) member, France observes most of the FATF+49 standards. It is also a member of the Caribbean Financial Action Task Force (CFATF) as a Cooperating and Supporting Nation, the South American Financial Action Task Force (GAFILAT) with observer status and the Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG) with observer status.
  • France has established a financial intelligence unit, the unit for Treatment of Intelligence and Action Against Clandestine Financial Networks Unit (TRACFIN), which is a member of the Egmont Group.
  • Account opening procedures require formal identification of the customer and beneficial owners.
  • Residents making currency exchange transactions exceeding EUR 1,000 must be identified; the threshold for non-residents is EUR 10,000 provided it is not a business to business transaction.
  • The anonymous purchase, reloading and use of prepaid cards is limited to a value of EUR 250 for sales with a limit of cash withdrawals of EUR 100.
  • French nationals exchanging cash exceeding EUR 1,000 into another currency must be identified.
  • There is no legal requirement for financial institutions to include originator information in either payment or message forms accompanying wire transfers.  However, the rules and conduct standards issued by the Fédération Française des Banques require banks to include certain originator data (such as name, address, and identifying code of the originator where the originator is a business entity).
  • Financial institutions in the broadest sense are required to record and report suspicious transactions to TRACFIN.
  • All cash withdrawals and deposits exceeding EUR 10,000 in a single month must be reported to TRACFIN.
  • Individuals entering or exiting the EU must declare currency of EUR 10,000 to the customs authorities.
  • Records must be kept for a period of at least five years.

* Data as at January 2018.

Taxation

  • A company incorporated in France is deemed a tax resident. A foreign company is considered resident if it is managed and controlled in France.
  • Rulings are becoming a regular practice. A special ruling procedure exists to confirm whether a foreign entity has a PE in France.
  • Taxable gains are calculated by deducting the net book value of an asset from the sale proceeds, and are included in operating profits and taxed at the normal corporate tax rate.
  • A participation exemption applies to capital gains arising from the sales of shares that form part of a substantial investment if the shares have been held for 24 months. The gain is 88% exempt, resulting in a maximum effective rate of 4.13%.
Payments to:InterestDividendsRoyaltiesOther income
Resident entitiesNoneNoneNoneNone
Non-resident entitiesNone0%/ 30%0%/ 33.33%0%/ 33%
  • 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 30% withholding tax, 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.
  •  Royalties paid to a non-resident entity are subject to the corporate income standard tax rate. 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 after-tax income of a French branch of a foreign company is deemed to be distributed to non-residents and is subject to a 30% branch tax. The tax may be eliminated or reduced under a tax treaty, and is not due if the foreign head office is located in the EU/EEA and is subject to income tax with no possibility of opting out or of being exempt; and the income is taxable in the foreign country.
  • France has exchange of information relationships with 144 jurisdictions through 115 double tax treaties and 29 TIEAs (www.eoi-tax.org, January 2018).
  • 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 will be 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 will 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 will also cover information about which entities do business in a particular jurisdiction and the business activities each entity engages in. The information will be collected by the country of residence of the MNE group, and will then be exchanged through exchange of information supported by such agreements as the MCAA. First exchanges under the MCAA will start in 2017-2018 on 2016 information. There are currently 102 signatory countries.
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  • The deduction of interest expense on related party debt is deferred if the interest exceeds the highest of the following thresholds:
    • the interest expense on a debt equal to 1.5 times the equity;
    • 25% of the borrower’s adjusted EBITDA; and
    • the amount of interest income received from related parties. An additional deduction may be available when the borrower is part of a consolidated tax group.
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  • Non-deductible interest is carried forward for 20 years, but 5% of the total carryover becomes permanently disallowed each year.
  • The scope of the thin capitalisation rules has been extended in certain circumstances to loans granted by a third-party entity, but guaranteed by a related company.
  • Acquisition-related expenses are fully deductible only where the shareholding is actually managed from France or from the EU or EEA (European Economic Area). The burden of proof is on the taxpayer to demonstrate that decisions on share-related transactions are made in France and control of the subsidiary’s management is effectively undertaken from France or from the EU or EEA. Failing that, a portion of the internet expenses relating to the acquisition will be disallowed each year in an amount corresponding to the ratio between the acquisition price and the average of the company’s indebtedness for the fiscal year concerned. This will apply until the end of the eighth fiscal year following the acquisition. The interest disallowance does not apply where:
    • the value of the shares held by a company does not exceed
      EUR 1 million; or
    • the French company demonstrates that the indebtedness ratio of the group exceeds, or at least equals, its own; or
    • the French company demonstrates that the loan was aimed at financing assets other than the shares.
  • Finance charges are capped at 75% of their net amount. However, the cap does not apply if the total finance charges (including charges disallowed under the thin capitalisation rules) incurred are below
    EUR 3 million.
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  • 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 systemic risk tax at 0.222% applies on the risks assumed by banks. The tax base is the applicable minimum required regulatory capital. The tax is, however, being progressively phased out, as the EU Single Resolution Fund, with an overlapping purpose, is being introduced. The systemic risk tax is scheduled to be phased out completely by 1 January 2019.
  • 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 2018 (www.deloitte.com).

Market data updated as of 01-10-18