Pillar 2 Dashboard: France

On October 14, 2025, France released the 2026 Finance Bill. This includes amendments to include the June 2024 OECD Administrative Guidance, as well as DAC 9 implementation.

On February 15, 2025, the French Finance Act 2025 was published in the Official Gazette. Article 53 includes amendments to the French Global Minimum Tax Regime for the OECD Administrative Guidance. 

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. The Pillar 2 Notification Form (N° 2065-INT-SD 2025) was subsequently issued.

On 10 October 2024, the French Government presented the draft Finance Bill for 2025 to Parliament. This includes amendments to its GMT law to reflect the OECD Administrative Guidance, including the December 2023 OECD amendments to the Safe Harbours. 

On December 30, 2023, the French Official Gazette published the 2024 Finance Act. This includes provisions to enact the EU Minimum Tax Directive. 

On 21 December 2023, the French Parliament approved the Finance Bill for 2024.

Article 4 of the French 2024 Finance Bill (published on September 27, 2023) includes provisions to implement the EU Global Minimum Tax Directive.

GLOBE APPLICATION

General

As expected, the law closely follows the EU Directive. There are very few options given to member states in the EU Directive in terms of flexibility over national implementation.

As noted below, there are significant aspects of both sets of OECD Administrative Guidance that are not included in the law. Further decrees may therefore be expected to implement these provisions.

Administrative Guidance

The only aspects of the First Set of OECD Administrative Guidance included in the original law are:

– Forex hedge election (Article 2.2)

– Excluded Dividends – Asymmetric treatment of dividends and distributions (Article 2.3)

– Debt release election (Article 2.4)

– Accrued Pension Expenses (Article 2.5)

– Excess negative tax carry-forward guidance (Article 2.7)

– Substitute Loss carry forwards (Article 2.8)

– The extension of the taxable distribution method election to insurance investment entities (Article 3.1)

– Exclusion of Insurance Investment Entities from the definition of Intermediate Parent Entity and Partially-Owned Parent Entity (Article 3.2)

– Extension of definition of restricted tier 1 capital (Article 3.3)

– Liabilities related to Excluded Dividends and Excluded Equity Gain or Loss from securities held on behalf of policyholders (Article 3.4)

– Portfolio shareholding election (Article 3.5)

– Transitional Rules (Article 4)

The Transitional CbCR Safe Harbour from the Second Set of OECD Administrative Guidance is included in the law.

As such, the following are not included in the original law:

– Blended controlled foreign company regimes;

– Transferable tax credits;

– Meaning of “ancillary” for Non-Profit Organisations;

– Excluding sovereign wealth funds from the definition of Ultimate Parent Entity;

– The extension of the tax transparency election to mutual insurance companies; and

– Additional rules (such as the deemed 50% requirement where employees perform work outside the employer’s jurisdiction for the SBIE).

The December 2023 Administrative Guidance provides that groups can still qualify for the Transitional CbCR Safe Harbour if they complete Article 2.2.1.3(a) of the GloBE Information Return using the data from Qualified Financial Statements that would have been reported as Total Revenue and PBT in a Qualified CbC Report if the MNE Group were required to file a CbC Report. This is designed to ensure that domestic groups for instance can still qualify for the safe harbour (as they would not otherwise prepare CbC reports.

Article 223 VZ of the French Finance Act provides for this and states that the amounts that the CbCR Safe Harbour are tested against are the amounts derived from the French statutory accounts (eg the PBT and turnover). This is further clarified in the 2025 Finance Act. 

The 2025 Finance Act includes a number of aspects from the First, Second and Third Set of OECD Administrative Guidance. The Fourth Set of OECD Administrative Guidance (issued on June 17, 2024) is not included and the Explanatory Notes to the Bill note that they will be included in a future draft finance bill or, in Regulations. The 2025 Finance Act includes:

-Rebasing monetary thresholds in the GloBE Rules (Article 1.1 – First Set of OECD Administrative Guidance)

-Equity Gain or loss inclusion election (Article 2.9 – First Set of OECD Administrative Guidance)

-MTTCs (Article 2 – Second Set of OECD Administrative Guidance)

-SBIE Rules (Article 3 – Second Set of OECD Administrative Guidance):

       -Foreign rules

        -Leases

-QDMTT Safe Harbour (Article 4.1 – Second Set of OECD Administrative Guidance)

-Transitional CbCR – Purchase Accounting Adjustments (consistent reporting condition, goodwill impairment adjustment) (Article 1 – Third Set of OECD Administrative Guidance)

-Transitional CbCR – Same Financial Statements/Local Financial Statements for Statutory Reporting (Article 2.3.1 – Third Set of OECD Administrative Guidance)

-Transitional CbCR – Adjustments to Qualified Financial Statements/Dividend Mismatches (Article 2.3.3 – Third Set of OECD Administrative Guidance)

-Transitional CbCR – MNEs not required to file CbC Reports (Article 2.3.4 – Third Set of OECD Administrative Guidance)

-Transitional CbCR – Treatment of hybrid arbitrage arrangements (Article 2.6 – Third Set of OECD Administrative Guidance).

The June OECD Administrative Guidance includes further guidance addressing the application of the recapture rule to aggregated DTL amounts. The 2026 Finance Bill includes these amendments for financial years beginning on or after December 31, 2023, and specifically includes:

-Aggregate DTL Category basis (Article 1.2.1)

-Exclusion of certain types of GL accounts and separate tracking (Article 1.2.1)

-Exclusion of GL accounts that generate standalone DTAs (Article 1.2.1)

-Exclusion of swinging accounts and separate tracking (Article 1.2.1)

-FIFO/LIFO Basis (Article 1.2.1)

-Aggregation of Short-term DTLs (Article 1.2.1)

The 2026 Finance Bill includes an election for a FIFO basis to determining the amount of a reversal where the category of deferred tax liabilities includes only deferred tax liabilities relating to a single account in the general ledger of the constituent entity.

Whether the FIFO or LIFO basis applies will have an impact on the calculation of the amount of any reversal.

The amount of the reversal is referred to in the OECD guidance as the ‘Unjustified Balance’ in the current Fiscal Year (ie the fifth subsequent Fiscal Year after the year in which the DTL accrual occurred and was claimed in the Adjusted Covered Taxes) when compared with the previous year.

The Unjustified Balance is the excess (if any) of the Outstanding Balance of the DTL over the Maximum Justifiable amount for that category. The Maximum Justifiable Amount is determined differently depending on whether the FIFO or LIFO basis applies.

Under the FIFO basis, the Maximum Justifiable amount is the sum of the net increases in the outstanding DTL balance for each Fiscal Year in the five-year testing period in which there was a net increase in the outstanding DTL balance. This ensures that a net decrease in the DTL balance with a Fiscal Year is treated as reducing the net increase in DTL balance in the earliest Fiscal Year in chronological order.

Under the LIFO basis, the Maximum Justifiable amount is the greater of zero or the net amount of the DTL accruals and reversals that occurred during the five year testing period.

Safe Harbour and Penalty Relief Guidance

The law provides for the application of the Transitional CbCR Safe Harbour, and the Transitional UTPR Safe Harbours.

However, Article 53(25) of the 2025 Finance Act includes the QDMTT Safe Harbour and Article 53(2) provides for simplified calculations for NMCEs.

As noted above, the 2025 Finance Bill also includes aspects of the December 2023 Administrative Guidance that amend the Transitional CbCR Safe Harbour rules.

Elections in the OECD Model Rules

All of the elections included in the OECD Model Rules and the EU Minimum Tax Directive are provided in the law, including:

– Excluded Entity Election (Article 223VL ter of the law – applies only to excluded entities that are 95% or 85% subsidiaries)

– Stock-Based Compensation Election (Article 223 VO octies of the law)

– Election to use the Realization Method (Article 223 VO nonies of the law)

– Election to Spread Capital Gains (Article 223 VO decis of the law)

– Consolidation Election (Article 223 VO undecies of the law)

– Unclaimed Accrual Election  (Article 223 VU SEEN of the law)

– GloBE Loss Election (Article 223 VV of the law)

– Prior Year Adjustment Election (Article 223 VX of the law)

– De minimis Election (Article 223 WD of the law)

– Substance-Based Income Exclusion Election (Article 223 WA of the law)

– Taxable distribution Election (Article 223 WV of the law)

– Tax transparency Election (Article 223 WU of the law)

– Distribution Tax Regime Election(Article 223 WS of the law)

– Safe Harbour Elections (Transitional CbCR Safe Harbour plus the Transitional UTPR Safe Harbour).

Elections in the Administrative Guidance

Elections included in the OECD Administrative Guidance that are included in the law include the:

– Debt Release Election (Article 223 VO duodecies of the law)

– Foreign Exchange Hedge Election (Article 223 VO quaterdecies of the law)

– Portfolio Shareholding Election (Article 223 VO terdecies of the law)

– Excess Negative Tax Carry-Forward Election (Article 223 VT Quater of the law)

Article 53(4) of the 2025 Finance Act includes the Equity Investment Inclusion Election.

Differences to Model Rules

As expected, the law closely follows the EU Directive. There are very few options given to member states in the EU Directive in terms of flexibility over national implementation.

The main options relate to the design of the QDMTT.

The key differences are with the OECD model rules. ie:

– The law extends the GloBE rules to include large scale, purely domestic groups,

– France applies the IIR to not only foreign subsidiaries but also to all domestic constituent entities. This is permitted but not mandatory under the GloBE Model Rules.

The OECD Model Rules allow flexibility as to how to apply the UTPR. France’s approach is to apply a UTPR top-up tax rather than a denial of deduction.

As such the carry forward provisions in Article 2.4.2 of the Model Rules for UTPR amounts not sufficient to provide for the additional cash tax expense are not relevant and these rules are not included in the law.

The 2026 Finance Bill includes some changes to implement key aspects of the OECD guidance, in particular it provides:

Amended definition of UPE

For financial years ending on or after December 31, 2025, the definition of a UPE is amended by Article 26(4) to include specific entities in the mutual banking sector and insurance sectors.

In particular, it includes:

– a central body referred to in the Monetary and Financial Code (Crédit Agricole S.A., the central body of savings banks and popular banks, and the National Confederation of Mutual Credit.

– a departmental or interdepartmental fund of a mutual credit union when it is required to prepare consolidated financial statements in accordance with a qualified financial accounting  standard.

Amended definition of Consolidated Financial Statements

For financial years ending on or after December 31, 2025, the definition of consolidated financial statements is amended by Article 26(7) to include combined accounts established by an entity in Article L. 345-2 of the Insurance  Code, of 8° of Article L. 423-1-2 of the Construction and Housing Code or Article L. 524-6-2 of the Rural and Maritime Fishing Code.

Qualifying Domestic Minimum Top-Up Tax

Article 223 WF of the law applies a domestic minimum tax from December 31, 2023.

Article 223 WF(2) provides that the standard GloBE calculation rules are to be used for the QDMTT calculation.

Under Article 223 WF(2) of the original law, MNEs can opt not to use the UPEs accounting standard and can instead use IFRS or the French accounting standard.

This means, for instance, that a French-based low-taxed group entity may choose to compute the excess profit for QDMTT purposes based on IFRS whilst its UPE uses GAAP of the USA in the preparation of its consolidated financial statements.

However, this is deleted in Article 53 of the 2025 Finance Act, as such the general provisions of the GloBE rules will apply for this purpose from December 31, 2024.

Other provisions of the OECD Administrative Guidance relating to the design of QDMTTs are not included (eg there is no restriction on the pushdown of CFC/hybrid taxes or taxes on distributions). They are however included in Article 53(10)-(12) of the 2025 Finance Act.

Article 53(24) of the 2025 Finance Act provides that each constituent entity in France is liable for its QDMTT. The QDMTT allocated to a constituent entity for a financial year is equal to the QDMTT of the group allocated on the ratio between the QDMTT calculated individually by the entity and the total QDMTT for all group entities in France. For financial years ending on or after December 31, 2025, Article 26(54) of the 2026 Finance Bill provides that if no QDMTT is allocated to an entity of the group or subgroup the QDMTT is allocated to a constituent entity based on the GloBE income of that constituent entity and the total GloBE income of the constituent entities located in that territory.

However, where DMTT arises to investment entities or insurance investment entities, the MNE/Domestic group is required to designate another constituent entity that is a member of the same group, located in France and which is neither an investment entity nor an insurance investment entity. This entity will be liable for the DMTT.

If another entity is not designated the person liable for the DMTT will be constituent entity that is a member of the group located in France and which has the highest GloBE income for the financial year in question.

If no constituent entity of the group, other than an investment entity or an insurance investment entity, is located in France, the investment entity or insurance investment entity remain liable for DMTT. The 2026 Finance Bill amends this to provide that investment entities and insurance investment entities are exempt from the QDMTT if no constituent entity of the group, other than an investment entity or an insurance investment entity, is located in France.

Registration

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.

Filing

The relevant aspects of the submission of a GloBE Information Return (GIR) are included, as provided in the EU Directive.

The proposed approach is that every Constituent Entity located in France will have an obligation to file a GIR in France. However, this obligation can be discharged if the GIR is filed by:

– The Ultimate Parent Entity, or

– The Designated Filing Entity.

Where the GIR is being filed by either the Ultimate Parent Entity or the Designated Filing Entity, the Constituent Entity, must file a notification.

The notification must contain:

– Details of the entity that is filing the GIR, and

– The jurisdiction in which such an entity is located.

Where the GIR is filed by the Designated Local Entity it needs to outline the Constituent Entities that it is filing on behalf of.

The GIR must be filed no later than 15 months after the end of the fiscal year (with an 18-month deadline for the Transition Year).

The law also requires submission of an additional self- assessment return (a ‘GloBE Tax Return’) by the GIR filing deadline. Article 366 B.-I of the General Tax Code outlines the information required in the return.

Article 46c-0 ZZD of the General Tax Code (inserted by Decree No. 2024-1126 of December 4, 2024) provides that the GIR is to be completed in euro or in the currency used in the consolidated financial statements of the group.

The 2026 Finance Bill implements the EU DAC 9 amendments. This simplifies reporting in-scope groups by enabling central filing of a top-up tax information return (TTIR) and introduces a standard form for filing the TTIR across the EU, in line with the GIR.

Transitional Filing 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;

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

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

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

-Details of the corrections 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 corrections 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.

Payment

Article 1679 deci of the law provides that the top-up tax payable is due by the deadline for filing the GloBE tax return. However, it provides that constituent entities subject to QDMTT or UTPR tax 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.

Penalties

Article 1729 F bis of the law provides for a fine of of an amount of 100,000 euros, for late filing or a failure to file the GIR or GloBE tax return. Other late filings are subject to a penalty of up to 50,000 euros. This is subject to a cap of 1 million euros for an MNE group with a number of constituent entities in France.

France has released its Pillar 2 notification form for in-scope groups (Form N° 2065-INT-SD 2025). 

Article 223 WW(1) 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.

The notification form is filed as an annex to the tax return. 

2065-int-sd_5027.pdf