The French Parliament approved the Finance Bill for 2016 and and the amended Finance Bill for 2015 on 17 December 2015.

The Finance Bill enacts the country-by-country (CbC) reporting requirement into the legislation of France. From 1 January 2016 and after, the CbC reports will have to be submitted within 12 months from the ending of each fiscal year.

The reporting requirement will be mandatory for  legal entities established in France (i) with joined accounts and holding directly or indirectly foreign branches or subsidiaries that produce a combined amount of €750 million or more (unless they are held by another entity that is already subject to a CbC reporting requirement),  or (ii) which are established  by foreign companies and satisfy the necessary requirements but are  located in a “non-compliant” jurisdiction (unless another group entity located in the “compliant” jurisdiction has been designated for filing the CbC report).

Penalties for non-compliance could amount to as much as €100,000.

The approved Finance Bill has also made the e-filing of the annual transfer pricing documentation mandatory.  Also the parent company of a French consolidated tax group will be obliged to file each consolidated entity’s annual transfer pricing documentation.

In the annual transfer pricing documentation the entities will have to mention the countries in which related companies of the entity own intangible assets or carry-out intra-group transactions.

In France the current participation exemption regime limits the taxable basis of qualifying dividends to 5% of the dividend amount. However under the provisions of the approved amended bill of 2015, from fiscal years beginning on or after 1 January 2016 the current 5% fraction of qualifying dividends will no longer be exempt for distributions made within a French tax consolidated group, and instead the rate of that taxable fraction will be set at 1%  for those distributions made within a tax consolidated group. The 1% rate will also apply to distributions received by a member of a French tax consolidated group which is from a member country of the European Union (EU) or European Economic Area (EEA) with holdings in qualifying subsidiaries of 95% or more.