GROUP TAXATION
Group taxation: French tax consolidation and deferred taxes
Group taxation covers the rules specific to related companies: the French tax consolidation regime (intégration fiscale), deferred taxes in consolidated accounts, tax rate reconciliation and consistent intercompany flows. We handle the calculations, the documentation and how they flow into the consolidated accounts.
What the engagement covers
We approach group taxation from the chartered accountant's angle: calculations, documentation and consistency between tax returns and accounts. For a tax-consolidated group, we prepare or review the group taxable result and the adjustments specific to the regime. In consolidation, we calculate deferred taxes and the tax rate reconciliation, which explains the gap between the theoretical and the actual tax charge. Legal and tax advisory questions are handled in coordination with your lawyers.
- Entry, exit and monitoring of the tax consolidation group
- Calculation or review of the group taxable result and neutralisations
- Review of tax sharing agreements and their accounting effects
- Deferred taxes under IFRS (IAS 12) and French GAAP (ANC 2020-01)
- Tax rate reconciliation and effective tax rate analysis
- Accounting consistency of intercompany flows with the transfer pricing policy
Who it is for, and when
Tax-consolidated groups that want to secure their calculations or prepare for a company joining or leaving the group; consolidating groups that must justify their tax charge to the statutory auditors; finance teams preparing a restructuring and wanting to measure its effects on the tax group. We also provide technical support to accounting firms on tax consolidation files.
How we work
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Review of the current set-up: tax group, agreements, prior-year calculations.
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Calculations: group taxable result, deferred taxes.
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Tax rate reconciliation and related notes.
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Documentation of calculations and positions taken.
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Points to watch for the following years.
FAQ
What are the main conditions for French tax consolidation?
The parent company must hold, directly or indirectly, at least 95% of the share capital of the subsidiaries included. All companies must be subject to French corporate income tax and share the same twelve-month financial year end. The election is made for five years (Articles 223 A et seq. of the French Tax Code).
What is a tax rate reconciliation?
It reconciles the theoretical tax charge, obtained by applying the parent company's tax rate to profit before tax, with the tax charge actually recognised. It explains the differences: permanent differences, foreign tax rates, unrecognised tax losses, tax credits. It is presented in the notes to the consolidated accounts.
Do deferred taxes have to be recognised in consolidated accounts?
Yes. Under IFRS (IAS 12) and French GAAP (ANC 2020-01) alike, temporary differences between carrying amounts and tax bases give rise to deferred taxes. Deferred tax assets are recognised only where their recovery is probable. Their calculation and support are a regular focus of statutory auditors.