France / Business – Accounting and Reporting Obligations of Commercial Companies in France

If you are a CEO, CFO, or auditor of a commercial company operating in France—or responsible for a French entity within an international or U.S.-based group—French accounting obligations are not mere administrative formalities.

Scope: Which Companies Are Subject to These Rules?

These obligations apply to all commercial companies established in France, including:

• French subsidiaries of U.S. or multinational groups,
• operating companies controlled by foreign holding entities,
• SMEs and growth-stage companies.

The level of accounting rigor required depends primarily on the company’s corporate tax regime.

Tax Regimes and Corresponding Accounting Requirements

1) Simplified Real Tax Regime (Régime réel simplifié)

A company qualifies for the simplified regime only if all of the following conditions are met:

• Annual revenue does not exceed:
  • €840,000 for trading, food service, or lodging activities,
  • €254,000 for other commercial activities.
• Annual VAT payable is below €15,000.

Exceeding any of these thresholds automatically subjects the company to the real normal tax regime.

2) Real Normal Tax Regime (Régime réel normal)

This regime applies:

• when the simplified regime thresholds are exceeded, or
• by voluntary election.

It requires full statutory accounting, with no simplifications.

Invoicing: A High-Risk Area for Management and Audit

Every commercial company is required to issue an invoice for each sale.

Mandatory invoice disclosures are strictly defined under French law. Learn more.

Risk exposure:

• Any non-compliance may result in fines of up to €375,000.
• Repeated violations may increase penalties to €750,000.

From a CEO, CFO, or auditor perspective, invoice compliance directly affects:

• revenue recognition,
• VAT reporting,
• the strength of the internal control environment.

Accounting Records: Requirements by Tax Regime

1) Companies Under the Simplified Real Regime

Companies may maintain simplified accounting, which includes:

• Simplified annual financial statements (balance sheet, income statement, notes).
• Cash-basis recording of transactions during the fiscal year.
• General journal consolidation on a quarterly basis.
• Limited exemptions for minor incidental cash expenses.
• Simplified inventory valuation methods.
• Recognition of receivables and payables only at fiscal year-end.

⚠️ CFO / Audit Note
Simplification affects format, not the obligation to maintain audit trails, supporting documentation, and effective controls.

2) Companies Under the Real Normal Regime

Companies must maintain full accrual-based accounting, including:

• Chronological recording of all transactions,
• Ongoing tracking of receivables, payables, expenses, and revenues,
• An annual inventory of assets and liabilities.

This framework aligns with international audit expectations, even though French statutory accounting standards (Plan Comptable Général – PCG) apply.

Mandatory Accounting Books and Records

Companies must maintain the following statutory records:

• General Journal (Livre-journal)
  Chronological record of all transactions.
• General Ledger (Grand-livre)
  Account-by-account classification in accordance with the French Chart of Accounts.
• Accounting Policies and Procedures Manual
  Documentation of accounting organization and internal controls.

These records must be:

• sequentially numbered,
• formally authenticated,
• tamper-proof and traceable.

Electronic accounting systems are permitted, provided data integrity and auditability are ensured.

Group Companies: No Simplified Accounting

When a company is part of a corporate group:

• Simplified accounting is not permitted.
• All transactions must be recorded daily.
• Journal entries must be consolidated monthly.

This area is a frequent focus of both tax audits and statutory audits.

Preparation and Filing of Annual Financial Statements

1) Standalone Companies (Not Part of a Group)

Micro-Entities

• Annual financial statements required.
• Notes not mandatory.
• Filing through the French business formalities portal or commercial court registry.
• Publication in BODACC.

Small Companies

• Simplified financial statements permitted.
• Abbreviated notes allowed.
• Filing and publication mandatory.

Medium-Sized Companies

• Full financial statements required:
  • balance sheet,
  • income statement,
  • notes,
  • management report.
• Annual filing required.

2) Group Companies

• Full statutory financial statements required.
• Consolidated financial statements required for the parent company controlling the group.
• Filing through the French business formalities portal.

This is a key intersection between French GAAP (PCG), group reporting, and IFRS or U.S. GAAP.

Record Retention Requirements

Accounting records and supporting documentation must be retained for at least 10 years from the fiscal year-end.

In the event of a tax audit or litigation:

• missing records may result in fines of €10,000,
• and significantly weaken the company’s defense position.

For auditors, this constitutes a major compliance red flag.