French Measure on Public Tax, Profit Reporting Voided

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By Rick Mitchell

Dec. 9 — France’s Constitutional Council rejected a measure under which multinational companies with headquarters in France would have had to file public country-by-country reports on their global taxes and profits starting from 2018.

Article 137 of a comprehensive anti-corruption law that Parliament passed last month, one of the provisions the council rejected in its Dec. 8 ruling, would have made changes within the country’s commerce code to require French parent companies to add a report on the group’s global profit and tax data to their annual public reports.

The requirement would have applied to multinational companies with more than 750 million euros ($791 million) in consolidated group revenue and was expected to take effect on the date the European Union implements its EU-wide public reporting measure, currently in draft form, or by 2018 at the latest. Companies said it would harm their ability to compete with foreign rivals not subject to the law.

The council, which has the last word on the constitutionality of laws, agreed. It approved a large part of the anti-corruption law while voiding some parts. It said the “requirement for certain companies to publish economic and tax indicators country by country will permit all companies on the markets or exercising these activities, and in particular their competitors, to identify essential elements of their industrial and marketing strategy.”

Thus, it concluded that the measure violated the freedom of enterprise guaranteed under the French Constitution.

Lower Threshold for Abridged Documentation

In a Dec. 9 statement, the minister of economy and finance, Michel Sapin, said the government is “satisfied” that the council approved the law’s “essential parts,” such as its creation of a French anti-corruption agency, legal protection for whistle-blowers, and creation of a public interest legal framework. Sapin said he had warned during parliamentary debate that the public country-by-country measure could face constitutional challenges.

Another, less controversial transfer pricing measure in the law seems to have survived the constitutional review. It lowered the filing threshold for companies that must submit a special abridged version of their transfer pricing documentation to the tax administration no later than six months after their yearly deadline for submitting tax returns.

The existing requirement, which took effect in 2014, applies to companies already subject to full documentation requirements introduced in 2010 for multinationals with more than 400 million euros in revenue, as well as those holding more than 50 percent of the capital of a subsidiary that has more than 400 million euros.

The anti-corruption law modified the country’s general tax code to lower the filing threshold for the abridged documentation to 50 million euros for fiscal years closing on or after Dec. 31, 2016.

Country-by-Country Reporting Now in Effect

Meanwhile, France’s existing country-by-country reporting law, which took effect Jan. 1, is alive and well. It requires French parent companies with more than 750 million euros in consolidated group revenue to report the group’s profits to the tax authority within 12 months of the fiscal year’s close.

The statute, which requires reporting of aggregated economic, accounting and tax data, and information about local activities underlying foreign entities’ profits the group owns or controls, mostly followed recommendations from the Organization for Economic Cooperation and Development and so doesn’t call for public reports.

To contact the reporter on this story: Rick Mitchell in Paris at correspondents@bna.comTo contact the editor on this story: Molly Moses at

For More Information

The Constitutional Council’s Dec. 8 ruling is available, in French, at

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