French GAAP is the national accounting framework, codified in the Plan Comptable Général (PCG), that every company registered in France must use when preparing its individual statutory accounts.1IFRS Foundation. IFRS Accounting Standards by Jurisdiction – France It is rules-based, anchored in historical cost, tightly bound to the corporate tax computation, and not interchangeable with IFRS at the individual-entity level. IFRS applies in France only to the consolidated accounts of companies whose securities trade on a regulated market, and optionally to the consolidated accounts of other groups; the standalone accounts of each French entity still have to be prepared under the PCG.
Who Sets the Rules and When They Apply
Accounting obligations in France sit in statute. The Commercial Code (Code de Commerce) requires every registered business to keep standardized accounts, and breach is enforceable rather than merely unprofessional. The detailed rules are written by the Autorité des Normes Comptables (ANC), an independent public authority created by ordinance in 2009 as the sole standard-setter for private-sector accounting.2Autorité des Normes Comptables. Autorité des Normes Comptables – Qui Sommes Nous Its regulations become binding once approved by the ministry and published in the Official Journal, and they are consolidated into the PCG as the single reference text.
The hierarchy runs from EU directives and French parliamentary legislation at the top, down through ANC regulations covering recognition, measurement, and presentation. IFRS use is restricted: mandatory for consolidated accounts of listed groups, optional for the consolidated accounts of unlisted groups, and not permitted for anyone’s individual statutory accounts.1IFRS Foundation. IFRS Accounting Standards by Jurisdiction – France Those individual accounts are what the French tax authorities use to compute corporate income tax, which is why the accounting-to-tax link in France is unusually direct.
Books have to be kept in French and denominated in euros. A subsidiary of an international group can run whatever reporting software its parent prefers, but a PCG-compliant set of accounts in French still has to exist.
The Chart of Accounts and What the Statements Look Like
The most distinctive feature of the PCG is a mandatory, standardized chart of accounts. Companies do not design their own account numbers or categories. Every entity uses the same numbering, the same definitions, and the same classification logic, which is what makes cross-company comparison and audit straightforward for tax inspectors and commercial courts.3Autorité des Normes Comptables. Plan Comptable Général – Version Consolidée au 1er Janvier 2024
The chart is organized into eight classes:4Autorité des Normes Comptables. Plan de Comptes PCG 2025
- Class 1, capital and financing: equity, reserves, retained earnings, long-term debt.
- Class 2, fixed assets: tangible, intangible, and financial assets, with their depreciation and impairment.
- Class 3, inventory and work-in-progress.
- Class 4, third-party accounts: receivables and payables, including tax and social security balances.
- Class 5, financial accounts: cash, bank, short-term investments.
- Class 6, expenses, feeding the income statement.
- Class 7, income: sales, financial income, other operating receipts.
- Class 8, special accounts: off-balance-sheet commitments and analytical breakdowns.
Classes 1 through 5 build the balance sheet; the gap between Classes 6 and 7 produces the period’s profit or loss. Banking and insurance use specialized adaptations, but the class structure is the same.
Every set of statutory accounts has three components in a prescribed format: the Balance Sheet (Bilan), the Income Statement (Compte de Résultat), and the Notes (Annexe). Two features catch international readers off guard. The Bilan classifies items by legal nature and PCG class rather than strictly by liquidity, so it reads differently from an IFRS balance sheet. The Compte de Résultat presents expenses by nature (raw materials, personnel costs, taxes, depreciation) rather than by function, so there is no “cost of goods sold” or “selling expenses” line. Performance is then split into Operating, Financial, and Exceptional results before arriving at Net Income, with Operating Income the figure analysts focus on.
The Annexe carries the accounting policies, depreciation methods, movements in fixed assets and provisions, related-party transactions, and off-balance-sheet commitments, and it has to satisfy both the accounting rules and the disclosure obligations in the Commercial Code.
Why the Statutory Accounts Are Shaped by Tax
Because the individual accounts drive the corporate tax computation, some entries exist in the financial statements for tax reasons alone. The clearest case is regulated provisions (provisions réglementées): entries with no economic substance, booked because tax law permits or requires them. Accelerated depreciation is the most common example. When tax rules allow a faster write-off than the asset’s actual useful life would justify, the excess is recorded in the balance sheet as a regulated provision rather than handled outside the books as a tax-only adjustment. Reported net income in the statutory accounts therefore reflects tax optimization choices alongside economic performance.
The upside is simpler compliance; there is no fully separate set of tax books. The downside is that the statutory numbers can mislead anyone reading them as pure economic reality, and international parents preparing consolidated IFRS or US GAAP accounts routinely strip these entries out when they reconcile.
Where French GAAP and IFRS Produce Different Numbers
Because the PCG is rules-based and leans on prudence and legal form, several of its treatments diverge sharply from IFRS. The differences change reported profit, asset values, and leverage, so they matter for anyone comparing a French statutory filing to an IFRS set of accounts.
Historical Cost and Revaluation
French GAAP keeps fixed assets at acquisition cost less accumulated depreciation and impairment. IFRS allows revaluation to fair value for certain asset classes; French GAAP generally does not. A narrow election under Article L.123-18 of the Commercial Code permits a voluntary revaluation of tangible and financial assets, but the resulting surplus is parked in equity and cannot be distributed as dividends.
Goodwill
Goodwill under French GAAP is presumed to have an indefinite useful life and is not amortized by default. The presumption can be rebutted when a company can show the benefits will end at a determinable date, in which case amortization runs over that estimated life, or over ten years when a reliable estimate is not possible. Small businesses have a simpler option: amortize over ten years without justifying a limited useful life.5Worldwide Tax Summaries. France – Corporate – Deductions IFRS likewise does not amortize goodwill but imposes a detailed annual impairment test that French GAAP does not prescribe in the same way.
Leases
IFRS 16 effectively removed the operating-versus-finance distinction for lessees, putting almost every lease on the balance sheet as a right-of-use asset with a matching liability.6Deloitte Accounting Research Tool. 5.7 Leases French GAAP keeps the old split. Simple operating leases are expensed as paid and stay off the balance sheet. Only finance leases (crédit-bail) that transfer substantially all risks and rewards of ownership get capitalized. For a company with large office or retail leases, this one difference can transform reported leverage and total assets.
Deferred Taxes
In individual statutory accounts under French GAAP, deferred taxes are generally not recognized at all. Deferred tax accounting is treated as a consolidation adjustment, applied only when preparing group accounts. IFRS requires a comprehensive balance sheet approach to deferred taxes in every set of financial statements, covering nearly all temporary differences between carrying amounts and tax bases. A French company’s statutory balance sheet and its consolidated IFRS balance sheet can therefore look quite different on tax-related lines.
Revenue Recognition
IFRS 15 built a five-step model around performance obligations in customer contracts. French GAAP sticks to the traditional transfer-of-risks-and-rewards test and gives more weight to the legal form of a transaction than to its economic substance. The French approach is often simpler to apply, but it can shift the timing of revenue, particularly on multi-element or long-term service contracts.
What the Differences Add Up To
The cumulative effect runs in one direction. French GAAP statutory accounts tend to report lower total assets, with operating leases absent, assets held at historical cost, and no deferred tax assets, while the bottom line carries tax-driven provisions that depress reported earnings. Expect adjustments on nearly every major line when reconciling to IFRS or US GAAP.
Audit Thresholds
Not every French company needs a statutory auditor (Commissaire aux Comptes), but the thresholds are lower than many foreign-owned operations assume. Since March 2024, an audit is required when a company exceeds two of three thresholds at year-end:7Service-Public.fr. Thresholds for Size of Businesses and Groups Change
- Independent businesses: balance sheet total above €5 million, net turnover above €10 million, or more than 50 employees.
- Subsidiaries controlled by another entity: balance sheet total above €2.5 million, net turnover above €5 million, or more than 25 employees.
The subsidiary thresholds catch many foreign-owned entities that would be too small to trigger an audit on a standalone basis. Once appointed, the Commissaire aux Comptes certifies that the statutory accounts give a true and fair view, and the role carries legal reporting obligations to the public prosecutor if certain irregularities are discovered. It is not the same advisory relationship many U.S. companies have with their external auditor.
Filing the Accounts and What Happens If You Don’t
After the annual shareholders’ meeting approves the accounts, you file them with the commercial court registry (greffe du tribunal de commerce). The deadline is one month after approval for paper filings, or two months for electronic filings.8Service-Public.fr. Submission of the Annual Accounts of a Business The filing package covers the annual accounts, the management report, the auditor’s report where applicable, and the resolution allocating profits.
Missing the deadline exposes the director to a criminal fine of €1,500, rising to €3,000 for repeat offenses. The president of the commercial court can also order the deposit within one month, often with a daily penalty payment (astreinte) running until compliance, and any interested party, including employees and former employees, can ask the court to compel filing.8Service-Public.fr. Submission of the Annual Accounts of a Business These tools are used in practice, and the financial exposure builds quickly once an injunction is in place.