France Issues a Decree for Pillar 2 Reporting Requirements

On December 5, 2024, Decree No. 2024-1126 was published in the French Official Gazette. This provides additional details on the reporting requirements for Pillar 2 purposes.

Articles 223 WW and 223 WW bis provide the general reporting requirements for the filing of a GloBE information return (GIR) and GloBE tax return in France. Article 223 WW provides that the content of the GIR and GloBE Tax Return are to be determined by a decree. This is included in Decree No. 2024-1126 (‘the Decree’).

The Decree inserts a number of new Articles into the General Tax Code, which cover 5 main areas:

Additional Registration Information

Article 223 WW of the law provides that a constituent entity located in France that is a member of an in-scope MNE or domestic group is required to confirm to the tax administration in its income statement its membership in the group. It must also indicate the identity of the ultimate parent entity of the group and, where applicable, the entity filing the GIR as well as the jurisdiction in which they are located.

Article 1679 deci provides that constituent entities subject to the QDMTT or UTPR are permitted to designate a single entity from among the constituent entities liable to pay the tax and file the GloBE tax return/statement of settlement on their behalf.

Decree No. 2024-1126 of December 4, 2024 inserts a new Article 46c-0 ZZB into the General Tax Code to provide that if a designated filing entity is used for QDMTT/UTPR purposes, that in addition to the above information in Article 223 WW, the filing constituent entity is also required to provide the identity of the QDMTT/UTPR filing constituent entity.

Content of the GIR

A new Article 46 quarter-0 ZZD of the General Tax Code lists the information that is required to be submitted in the GIR. This is not reproduced here but it ties into the information provided in the OECD GIR Guidance. 

Transitional Simplified Reporting Election

Article 46c-0 ZZE of the General Tax Code (inserted by Decree No. 2024-1126 of December 4, 2024) provides that the reporting entity may opt for the transitional simplified reporting mechanism when the following two conditions are met:

-The financial year began before December 31, 2028 and ended by June 30, 2030;

-No top-up tax requiring apportionment between constituent entities is payable by the MNE or domestic group in the jurisdiction concerned.

Where this applies, the GIR does not include all adjustments to the Financial Accounting Net Income or Loss (“FANIL”), current tax expense or deferred tax expense on a Constituent Entity or sub-group basis (other than as determined below) and all adjustments can be reported on a net basis.

However, the following information must be reported in respect of each constituent entity:

-Capital gains and losses resulting from the sale of assets and liabilities excluded under subsection 3 of section VI of Title I of Part I of Book I of the General Tax Code;

-Adjustments carried out in accordance with the arm’s length principle;

-Adjustments relating to the entry and exit of constituent entities within a group of multinational enterprises or a national group under the GloBE restructuring provisions;

-Reductions in the qualified profit or loss of the ultimate parent entity which is a flow through entity;

-Adjustments relating to transfers of assets between constituent entities after November 30, 2021 and before the start of a transition year;

-Details of the adjustments relating to cross-border transactions adjusted to the arms length basis and adjusted expenses incurred under an intra-group financing agreement;

-Details of the adjustments relating to reductions in the qualified profit or loss of the ultimate parent entity which is a flow through entity or subject to a Deductible Dividend Regime;

-Details of the reallocations of tax between constituent entities (eg CFC’s, hybrid taxes pushed down);

-Details of the adjustments relating to the entry and exit of constituent entities within a group of multinational enterprises or a national group under the GloBE restructuring provisions;

-Details of the adjustments relating to transfers of assets between constituent entities after November 30, 2021 and before the start of a transition year;

-Options exercised at the level of the constituent entities;

-GloBE income excluded under the exemption for international shipping.

Qualifying States

A new Article 46 quarter-0 ZZG of the General Tax Code provides that an order of the Minister in charge of the budget willestablish the list of States which have respectively adopted a qualified DMTT, IIR or UTPR which have concluded an agreement with France allowing for the automatic exchange of information declarations.

Content of the GloBE Tax Return

A new Article 366 B.-I of the General Tax Code provides the information that will be required in the GloBE Tax Return. This includes:

 General information on the Entity

-Identification of the entity;

-The opening and closing date of its financial year;

-The status of the group’s ultimate parent entity;

-Whether the information return is being filed by the entity or a designated reporting entity; and

-The identification of the entity filing the information return with the identification number corresponding to that indicated on the information return.

Information on Top-Up Tax

-The amount of Top-Up Tax due under the income inclusion rule;

-The amount of Top-Up Tax due under the UTPR,  if any, corresponding to the sum of the amounts due by each taxable entity;

-If a designated UTPR filing/payment entity is chosen under Article 1679 deci of the General Tax Code, for each entity in whose name the tax is paid, the information necessary to determine the UTPR allocation to each constituent entity;

-The amount of Top-Up Tax due under the QDMTT,  if any, corresponding to the sum of the amounts due by each taxable entity;

-If a designated QDMTT filing/payment entity is chosen under Article 1679 deci of the General Tax Code, for each entity in whose name the tax is paid, the information necessary to determine the QDMTT allocation to each constituent entity; and

-The total Top-Up Tax Amount payable by the filing entity (the sum of tax under the IIR, QDMTT and UTPR).

Entities which are not liable for Top-Up Tax or which have designated another entity to pay it under Article 1679 decies of the General Tax Code, are exempted from filing the GloBE Tax Return.