French GAAP is the national accounting framework, codified in the Plan Comptable Général (PCG), that every company registered in France must use to prepare its individual statutory accounts. IFRS is not permitted for any French entity’s standalone accounts, no matter how large or internationally owned the business is.1IFRS Foundation. IFRS Accounting Standards by Jurisdiction – France The system is rules-based, anchored in historical cost, and closely tied to the calculation of corporate income tax. If you are opening a French subsidiary, analyzing a French company’s filings, or reconciling French numbers to an IFRS or US GAAP group report, those three features shape almost everything you will see.
Who Sets the Rules
French accounting obligations carry the force of statutory law. The Commercial Code (Code de Commerce) requires all registered businesses to maintain standardized accounts, and the detailed rules sit in the PCG. The standard-setter is the Autorité des Normes Comptables (ANC), an independent public authority created by ordinance in 2009 and responsible for issuing all private-sector accounting regulations in France.2Autorité des Normes Comptables. Autorité des Normes Comptables – Qui Sommes Nous Its regulations become binding once approved by ministerial order and published in the Official Journal.
IFRS has a defined, narrow role in France. It is required for the consolidated accounts of companies whose securities trade on a regulated market, and non-listed groups may elect to use it for their consolidated accounts.1IFRS Foundation. IFRS Accounting Standards by Jurisdiction – France Individual statutory accounts always follow the PCG. Because those individual accounts feed the corporate tax computation, the relationship between accounting and tax in France is much tighter than most international readers expect.
All bookkeeping must be maintained in French and in euros. A French subsidiary using its parent’s global accounting system still has to produce PCG-compliant books in the local language.
The Plan Comptable Général
The most distinctive feature of French GAAP is a mandatory, uniform chart of accounts. Companies do not design their own account numbers or classification schemes. Every entity uses the same eight-class structure, the same account definitions, and the same posting logic, which is what makes cross-company comparison and audit inspection straightforward for the tax authorities and commercial courts.3Autorité des Normes Comptables. Plan Comptable Général – Version Consolidée au 1er Janvier 2024
The eight classes cover capital and financing, fixed assets, inventory, third-party receivables and payables, financial accounts, expenses, income, and special off-balance-sheet items.4Autorité des Normes Comptables. Plan de Comptes PCG 2025 Classes 1 through 5 populate the balance sheet; classes 6 and 7 produce the income statement, with their difference giving the period’s profit or loss. Banking and insurance use adapted versions, but the underlying architecture is the same.
What the Financial Statements Contain
Every set of French statutory accounts includes three components, each in a format prescribed by the PCG: the Balance Sheet (Bilan), the Income Statement (Compte de Résultat), and the Notes (Annexe).
Balance Sheet
The Bilan is usually presented in two-sided form. Assets sit on the left, starting with fixed assets and moving to current assets. Equity, provisions, and debts sit on the right. Items are classified by their legal nature and PCG account class rather than strictly by liquidity, so the layout feels different from an IFRS-formatted balance sheet even when the underlying numbers are similar.
Income Statement
Expenses are presented by nature rather than by function. Line items show raw material purchases, personnel costs, taxes, and depreciation, not “cost of goods sold” or “selling expenses.” The statement then breaks results into three intermediate balances: Operating Income (Résultat d’Exploitation), Financial Income (Résultat Financier), and Exceptional Income (Résultat Exceptionnel). These combine into Net Income (Résultat Net), and Operating Income is the figure French analysts focus on most.
Notes
The Annexe carries the disclosures that give the numbers context: accounting policies, depreciation methods, movements in fixed assets and provisions reconciling opening and closing balances, related-party transactions, and off-balance-sheet commitments. Its content satisfies both accounting and Commercial Code disclosure obligations.
Why Accounting and Tax Are So Closely Linked
Statutory accounts are the starting point for computing French corporate income tax, which means tax-driven entries appear directly inside the financial statements rather than being kept in a separate tax calculation.
The clearest example is regulated provisions (provisions réglementées). These are entries with no economic substance that exist solely because tax law permits them. Accelerated depreciation is the common case: when tax rules allow faster write-offs than the asset’s actual useful life would justify, the excess is booked as a regulated provision on the balance sheet. Reported net income in the statutory accounts therefore reflects tax choices as well as economic performance. The trade-off is real: there is no need to keep a fully parallel set of tax books, but the statutory numbers can mislead anyone who reads them as a clean measure of underlying performance. Parent companies preparing consolidated IFRS or US GAAP reports routinely strip these entries out during reconciliation.
Key Differences from IFRS
French GAAP is rules-based and gives weight to prudence and legal form, while IFRS is principles-based and emphasizes economic substance. Several concrete treatments follow from that split, and each one moves the numbers in a direction worth knowing about.
Historical Cost
Fixed assets stay on the books at acquisition cost, less accumulated depreciation and impairment. IFRS permits revaluation to fair value for certain asset classes; French GAAP generally does not. A voluntary revaluation of tangible and financial assets is possible under Article L.123-18 of the Commercial Code, but the resulting surplus is booked separately in equity and cannot be distributed as dividends.
Goodwill
Under current French GAAP, goodwill is presumed to have an indefinite useful life and is not amortized by default. A company can rebut that presumption by showing the benefits will end at a determinable date, in which case amortization is allowed over the estimated life, or over ten years if the life cannot be reliably measured. Small businesses may amortize over ten years without demonstrating a limited life.5Worldwide Tax Summaries. France – Corporate – Deductions IFRS also avoids goodwill amortization but requires annual impairment testing with a level of prescriptive detail that French GAAP does not match.
Leases
IFRS 16 removed the operating-versus-finance distinction for lessees and puts nearly all leases on the balance sheet as a right-of-use asset and a liability.6Deloitte Accounting Research Tool. 5.7 Leases French GAAP keeps the old split. Operating leases are expensed as paid and stay off the balance sheet. Only finance leases (crédit-bail) that transfer substantially all the risks and rewards of ownership are capitalized. For companies with major office or retail leases, this alone can reshape reported leverage and total assets.
Deferred Taxes
In individual statutory accounts, French GAAP generally does not recognize deferred taxes at all. Deferred tax accounting is treated as a consolidation adjustment, applied only when group accounts are being prepared. IFRS, by contrast, requires a full balance sheet approach to deferred taxes in every set of financial statements. The gap between a French company’s statutory balance sheet and its consolidated IFRS balance sheet is often widest on tax-related lines.
Revenue Recognition
IFRS 15 uses a five-step model built on identifying performance obligations within a customer contract. French GAAP focuses instead on the transfer of risks and rewards of ownership and gives more weight to the legal form of the transaction. The French approach is often less complex in practice but can shift the timing of revenue, especially on multi-element or long-term service arrangements.
Research and Development
Research costs must be expensed as incurred and cannot be capitalized later. Development costs may be recognized as intangible assets, but only for clearly identified projects with a reasonable prospect of technical success and commercial viability. If a company cannot separate its research phase from its development phase, the whole cost is expensed. IFRS under IAS 38 takes a similar structure, though the criteria and their practical application can diverge.
Net Effect
The combined direction is consistent. French statutory accounts tend to show lower total assets, thanks to off-balance-sheet operating leases, strict historical cost, and the absence of deferred tax assets, and the bottom line carries tax-driven provisions that reduce reported earnings. A reconciliation to IFRS or US GAAP will touch almost every major line.
When a Statutory Auditor Is Required
Not every French company needs a statutory auditor (Commissaire aux Comptes), but the thresholds are lower than many foreign owners assume. Since March 2024, a company must appoint an auditor when it 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 operations that would fall below the independent-business limits. The Commissaire aux Comptes certifies that the statutory accounts give a true and fair view, and the role carries statutory reporting duties, including obligations to the public prosecutor if certain irregularities come to light. It is a legal function, distinct from the advisory relationship some U.S. companies expect from an auditor.
Filing the Accounts
Once the annual shareholders’ meeting approves the accounts, the company files 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 includes the annual accounts, the management report, the auditor’s report when applicable, and the resolution on the allocation of profits.
Missing the deadline has real consequences. The director faces a criminal fine of €1,500, rising to €3,000 for repeat offenses, and the president of the commercial court can issue an injunction requiring deposit within one month, often with a daily penalty for continued delay.8Service-Public.fr. Submission of the Annual Accounts of a Business Any interested party can petition the court to compel filing, and these tools are used regularly.