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French tax audit new

obligations

Compulsory electronic submission

of accounting entry journal
Strictly Private
and Confidential

22 July 2014
Agenda
Page

1 E-tax audit 1

2 E-tax audit : final version of the technical norms 6

3 Contact details 12
E-tax audit

French tax audit new obligations

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Compulsory electronic submission of accounting entry journal •
Section 1 – E-tax audit

New obligation : compulsory electronic submission of

accounting entry journal

• Electronic submission of the accounting entry journal is now compulsory (Article L

47 A I of the French tax procedural Code amended by the 3rd finance bill for 2012) at
the beginning of the tax audit.

• For notices of tax audit received as from 1st January 2014. This new obligation
applies to fiscal years still opened to tax audit: fiscal years ended in 2011, 2012 and
2013 onwards (or to any older periods in case tax deficits are available)

• It applies to French companies, but also to French branches or Permanent

Establishement of a foreign company

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Compulsory electronic submission of accounting entry journal •
Section 1 – E-tax audit

New obligation : compulsory electronic submission of

accounting entry journal
• Failure to comply with this new obligation may trigger significant tax penalties or
constraints:
 As from 10 August 2014 penalties for not remitting a compliant e-file at due
date (at the very beginning of the tax audit) will be €5000 plus a 10% penalties
on any additional tax liability reassessed by the tax inspector in the frame of the
tax audit
 Tax authorities may alternatively self assess the taxable income (based on the
opposition to a tax audit process), in such a case a potential 100% penalty on
additional tax to be paid may be assessed on the items at issue in addition with
the reversal of the burden of proof. Such process have already been
implemented by tax authorities since 1st January 2014 for companies failing to
produce the e-file.
 Under the worst case scenario, tax authorities may reject the accounts of the
company in case where the accounting entries are lacking probative force
under French GAAP rules

French tax audit new obligations Compulsory electronic submission of accounting entry journal •
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Section 1 – E-tax audit

The e-file of accounting entries must be remitted to tax

inspector in a specific format
• The procedural rules for the e files to be submitted to the tax authorities are as
follows:
 Content: each file per fiscal year must include all the lines of accounting entries (non
centralized/non aggregated) complying with French GAAPs (PCG99) (or with
specific professional charts of accounts when applying compulsorily).
 In addition, each line of the accounting entries must include the information
corresponding to the 18 required fields (see appendix 1)
 Technical: the files should be saved in .txt or .csv or XSD format and remitted to tax
authorities on optical disks like CD-R/DVD-R (non rewritable), finalized versions
• The new obligation to provide the accounting entries under French GAAP implies to
have an accounting system which is fully compliant with French GAAP rules
• Tax inspectors will have the right to check the consistency of accounting entries e-file
with all tax returns (e.g VAT, corporate tax returns....). They may as well perform the
following analysis: selecting, sorting, ranking data for further investigations of
specific transactions with a view to identify question/request to the taxpayer

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Compulsory electronic submission of accounting entry journal •
Section 1 – E-tax audit

For many companies, the production of the e-file can be

difficult and IT processes may be complex to set up

• Based on our experience, for many enterprises, the production of the FEC can be
complex. The difficulties vary but may include:
 Inconsistency between the native chart of accounts and the French accounting regulation
(French GAAP regulations)
 The correct accounting data and fields to be included into the file due to the volume of data
and complexity of the system
 The identification/localization into the system of the non-aggregated accounting entries to be
included in the e-file
 The difficulties or even impossibility to produce the FEC directly from the company’s general
ledger software
 The generation of a unique accounting journal including all the data due to the volume of
data
 The reconciliation for control purposes of the accounting entries (at non aggregated layer)
with the ones declared but under an aggregated format (tax returns)
 The ability to obtain an error-free e-file mainly due to improper data selections or extractions

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Compulsory electronic submission of accounting entry journal •
Section 1 – E-tax audit

French entities must anticipate this obligation and test

their internal process

• At the tax inspector’s second visit on-site, enterprises should be prepared to

provide the accounting entry journal related to the years subject to tax audit
• Due to the fiscal years concerned by the new obligation (as from fiscal year 2011 and
onwards) and the risks derived from failure to comply with the obligation, tax payers
must test their internal process to secure their ability to produce the e-files which
meet the compliance requirements
 Based on our experience, in most cases it is not realistic (nor prudent) that a compliant e-files
can be produced during the very short period of time between the receipt of the tax audit
notice and the second meeting with the tax inspector
• This is the reason why we recommend to French entities to set up a process of
production of the e-file beforehand. The objective is to identify the right data to be
included, and to audit the e-file to secure that it is tax compliant and comprehensive
• Going forward, French entities should produce and maintain an electronic version of
their accounting entries after each closing date

French tax audit new obligations

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Compulsory electronic submission of accounting entry journal •
E-tax audit : final version of the
technical norms

French tax audit new obligations

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Compulsory electronic submission of accounting entry journal •
Section 2 – E-tax audit : final version of the technical norms

Technical norms and format published by tax

authorities
• The file copies will be sent, according to the tax payer’s choice under the following format:
 Flat file (CSV, Txt.), with sequential organization and fielded structure which should meet
the following criteria:
 Each accounting entry will be separated by the character of the return key and/or EOL key,
 The records’ length can be fixed or variable,
 The dividing character of zone possibly used must be unique and not ambiguous,

 Structured files, encoded in XML, in respect with the file XSD structure directly available
online via the website “www.impots.gouv.fr”
• All the entries in the accounting books related to a fiscal year will be set out in a single file,
called the “journal of accounting entries”, in which the entries are numbered chronologically by
date of accounting validation. This file will contain entries after closing operations, except
centralization entries. It will include the opening entries corresponding to the account balance
at the closing of the prior year. For each entry, the following minimum information, in the same
order as in the table in the next slide are compulsory.
• For flat files, the first line must include the name of the fields, as reported in the table below
(next slide).

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Compulsory electronic submission of accounting entry journal •
Section 2 – E-tax audit : final version of the technical norms

Compulsory information (fields)

N° Information Field Name Type of Field

1 The journal entry code JournalCode Alphanumeric

2 The journal entry label JournalLib Alphanumeric
3 The number of the accounting entry (follows a chronological and sequential numbering) EcritureNum Alphanumeric

4 The accounting date EcritureDate Date

5 The account number, which refers to the appropriate accounting terminology – the first three characters
CompteNum Alphanumeric
must meet the French accounting standard
6 The account label, under the French Accounting standard CompteLib Alphanumeric
7 The sub ledger account number (field must be left empty if not used) CompAuxNum Alphanumeric

8 The sub ledger account label (the field must be left empty if not used) CompAuxLib Alphanumeric
9 Reference of the relevant supporting document PieceRef Date
10 Date of the relevant supporting document PieceDate Date
11 Label of the accounting entry EcritureLib Alphanumeric
12 The debit amount Debit Numeric
13 The credit amount Credit Numeric
14 The lettering/Marking of the accounting entry (field must be left empty if not used) EcritureLet Alphanumeric

15 Lettering date (kept blank if not used) DateLet Date

16 Validation date of the accounting entry ValidDate Date
17 Amount in currency (blank if not used) Montantdevise Numeric
18 Code of the currency (leave blank if not used) Idevise Alphanumeric

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Compulsory electronic submission of accounting entry journal •
Compulsory information (fields)
Fiel
Name of
d French Description English Description Comments
the field
Num
Journal Code corresponds to the reference of various accounting
1 Le Code Journal de l'écriture comptable The journal Code JournalCode journals. Alternatively, reference can be made to the type of
accounting document or feeders.

Journal Label is the name of the Journal or of the type of accounting

2 Le Libellé Journal de l'écriture comptable The journal Label JournalLib
document

Le numéro sur une séquence The acountry entry number is the numbering of each accounting entry
3 chronologique et continue de l'écriture The number of the accounting entry EcritureNum Debit/Credit balanced which must be chronological and sequential.
comptable Numbering can be global or specific for each journals.

Accounting date is the date when the entry is originally booked in the
La date de comptabilisation de l'écriture
4 The accounting date EcritureDate IT system. If an entry cannot be reversed once booked, then
comptable
accounting date is the same as the validation date (see fields 16).

Le numéro de compte, dont les trois

The account number, which refers to Account number must natively comply with the French chart of
premiers caractères doivent
the appropriate accounting Accounts accroding to French accounting regulations on a line by line
5 correspondre à des chiffres respectant CompteNum
terminology - the first three characters basis. Any conversion made at the end of an accounting period based
les normes du plan comptable général
must meet the accounting standard on aggregated amounts is not compliant.
français

Le libellé de compte, conformément à la The account label must corresponds to the complete account title as
The account label, under the French
6 nomenclature du plan comptable général CompteLib per the French Chart of Accounts according to French accounting
Accounting Number
français regulation.

Le numéro de compte auxiliaire (à blanc The auxiliary account number corresponds to third parties' encoding
7 The subsidiary ledger account number CompteAuxNum
si non utilisé) accounts used by the company

Le libellé de compte auxiliaire (à blanc si The auxiliary account label corresponds to third parties' encoding
8 The subsidiary ledger account label CompteAuxLib
non utilisé) accounts label used by the company

PwC
 Section 2 – E-tax audit : final version of the technical norms

Compulsory information (fields)

Fiel
d Name of
French Description English Description Comments
Num the field
ber
This is the reference to the supporting documents enable the
Reference to the relevant supporting company to maintain the audit trail. This corresponds to a numbering
9 La référence de la pièce justificative PièceRef
document generated by the software which must be sequential or the number
show on the document itself

Date of the relevant supporting This is the date when the document is recorded or the date shown on
10 La date de la pièce justificative PièceDate
document the supporting document itself.

Under French accounting rules each accounting entry must be

11 Le Libellé de l'écriture comptable Label of the accounting entry EcritureLib identified by a clear and explanatory description drafted in French
language

12 Le montant au débit The debit amount Debit Amount debited in Euros

13 Le montant au crédit The credit amount Credit Amount credited in Euros

French tax audit new obligations

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Compulsory electronic submission of accounting entry journal •
 Section 2 – E-tax audit : final version of the technical norms

Compulsory information (fields)

Fiel
d Name of
French Description English Description Comments
Num the field
ber
Le lettrage de l'écriture (à blanc si non The clearing reference (field can be left Clearing code refers to the point of reference used in the accoutning
14 EcritureLet
utilisé) empty if not used) system to reconcile payment with receivables or payables

The clearing date (field can be left The clearing date corresponds to the date when it is recorded in the
15 La date de Lettrage (à blanc si non utilisé) DatLet
empty if not used) accounting system

The validation date corresponds to the date when the accounting

16 La date de validation de l'écriture Validation date ValidDate entry cannot be reversed. It may corresponds to the date when the
accounting entry is recorded (see field number 4 above)

Le montant en devise (à blanc si non Amount of legal currency (blank if not If the support document is labelled in a foreign currency, such
17 MontantDevise
utilisé) used) amount must be popoulated in this fields

L’identifiant de la devise (à blanc si non Name of the currency (blank if not

18 IDevise Identification of the foreign currency
utilisé) used)

French tax audit new obligations

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Compulsory electronic submission of accounting entry journal •
 Contact details

French tax audit new obligations

12
Compulsory electronic submission of accounting entry journal •
Section 3 – Contact details

Your contact at PwC/Landwell for E-Tax audit matters

Jean Sayag – Tax Partner, Lawyer

Specialized in E-tax obligations and E-tax audit
• jean.sayag@fr.landwellglobal.com
• + 33 (0) 1 56 57 86 32

French tax audit new obligations

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Compulsory electronic submission of accounting entry journal •