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  |header2 =  
  |header2 =  
  | label2 = Population:
  | label2 = Population:
  |  data2 = 66.26 million
  |  data2 = 66.55 million
  |header3 =
  |header3 =
  | label3 = Currency:
  | label3 = Currency:
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  |header5 =
  |header5 =
  | label5 = GDP:
  | label5 = GDP:
  |  data5 = US$2.739 trillion (2013 est)  
  |  data5 = US$2.129 trillion (2014 est)  
  |header6 =
  |header6 =
  | label6 = IGTA member:
  | label6 = IGTA member:
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==Financial regulatory framework==
==Financial regulatory framework==
===Bank supervision===
===Bank supervision===
The Autorité de Contrôle Prudentiel et de Résolution (ACPR) grants licences to and supervises banks and credit institutions.
On 4 November 2014, the European Central Bank (ECB) adopted the authority to monitor the financial stability of banks within the eurozone through its Single Supervisory Mechanism (SSM), in line with the EU’s SSM Regulation No 1024/2013 conferring specific tasks on the ECB with regard to the prudential supervision of credit institutions. The ECB has final supervisory authority, with member states’ national supervisory authorities now providing a supporting role. The ECB directly supervises the 120 “most significant” banks within each eurozone member state. The ECB is responsible for supervisory reviews, on-site inspections and investigations; granting/withdrawing banking licences; assessing bank acquisitions; ensuring compliance with EU prudential rules; and, if required, setting higher capital requirements to counter financial risks.
The Comité Consultatif du Secteur Financier (CCSF) monitors the interaction between the credit institutions and their clients. The Minister for the Economy and Finance is directly responsible for regulating the banking and insurance sectors after consultation with the Comité Consultatif de la Législation et de la Réglementation Financières (CCLRF). The CCLRF is mandated to opine on any proposed proscriptive texts relative to banking, finance and insurance (laws, orders, decrees and decisions, as well as any European regulations and directives) before they are adopted and become definitive.
France’s national supervisory authorities include the Autorité de Contrôle Prudentiel et de Résolution (ACPR) grants licences to and supervises banks and credit institutions.
The Comité Consultatif du Secteur Financier (CCSF) monitors the interaction between the credit institutions and their clients.  
The Minister for the Economy and Finance is directly responsible for regulating the banking and insurance sectors after consultation with the Comité Consultatif de la Législation et de la Réglementation Financières (CCLRF). The CCLRF is mandated to opine on any proposed proscriptive texts relative to banking, finance and insurance (laws, orders, decrees and decisions, as well as any European regulations and directives) before they are adopted and become definitive.


===Exchange controls===
===Exchange controls===
Controls apply to foreign investment from outside the EU in airlines and French flag shipping vessels (where majority ownership is prohibited). The Ministry of the Economy and Finance is required to authorise foreign investment in the public health, national security or defence sector.
Controls apply to foreign investment from outside the EU in airlines and French flag shipping vessels (where majority ownership is prohibited). Restrictions also apply to foreign investors from outside the EU in acquiring vineyards, establishing agriculture businesses, and setting up branches of insurance companies.


==Taxation framework==
==Taxation framework==
===Tax on corporate income===  
===Tax on corporate income===  
France imposes corporate income taxation (CIT) at a standard rate of 33.3%, together with a social contribution tax of 3.3% on the amount of the CIT in excess of €763,000. A 10.7% temporary surtax (increased from 5% as from 1 January 2014) applies to the standard corporate income tax liability for large companies with turnover exceeding EUR 250m, resulting in an overall effective corporate tax rate of 36.9%, or 38% for the largest companies when subject to the 3.3% social charge.
France imposes corporate income taxation (CIT) at a standard rate of 33.3%, together with a social contribution tax of 3.3% on the amount of the CIT in excess of €763,000. A 10.7% temporary surtax applies to the standard corporate income tax liability for large companies with turnover exceeding EUR 250m, resulting in an overall effective corporate tax rate of 36.9%, or 38% for the largest companies when subject to the 3.3% social charge.
Companies are taxed only on profits arising through a business entity operating in France and are subject to additional levies, including a local business tax and payroll taxes.
Companies are taxed only on profits arising through a business entity operating in France and are subject to additional levies, including a local business tax and payroll taxes.
Resident companies are taxed on any domestic or foreign ‘passive investment income’ not derived from a foreign permanent establishment. Foreign passive investment income includes royalties, interest, gains and dividends (unless the dividends are received under a participation exemption, in which case only 5% of the dividends are taxable).
Resident companies are taxed on any domestic or foreign ‘passive investment income’ not derived from a foreign permanent establishment. Foreign passive investment income includes royalties, interest, gains and dividends (unless the dividends are received under a participation exemption, in which case only 5% of the dividends are taxable).
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French entities controlled by entities established outside France are taxable in France on profits transferred, directly or indirectly, to the entity located abroad through an increase or decrease in the purchase or sales prices or by any other means. Companies exceeding certain thresholds must maintain contemporaneous transfer pricing documentation.
French entities controlled by entities established outside France are taxable in France on profits transferred, directly or indirectly, to the entity located abroad through an increase or decrease in the purchase or sales prices or by any other means. Companies exceeding certain thresholds must maintain contemporaneous transfer pricing documentation.
The documentation has to be drafted under a specific format, which includes a master file (describing the group organisation) and a country file (describing the company’s roles). The penalty for failing to provide the documentation is 5% of any transfer pricing reassessment, with a minimum of EUR 10,000 per fiscal year.
The documentation has to be drafted under a specific format, which includes a master file (describing the group organisation) and a country file (describing the company’s roles). The penalty for failing to provide the documentation is 5% of any transfer pricing reassessment, with a minimum of EUR 10,000 per fiscal year.
Interest rates charged by related parties are deemed to be at arm’s length if they do not exceed the average rate charged by banks to French businesses on loans with terms of two years or longer. Appropriate documentation (e.g. a bank quotation) should be made available to support higher rates.
Interest rates charged by related parties are deemed to be at arm’s length if they do not exceed the average rate charged by banks to French businesses on loans with terms of two years or longer. Appropriate documentation (e.g. a bank quotation) should be made available to support higher rates. If the interest rate exceeds that index, the taxpayer will have to demonstrate that it would have paid a similar or higher rate to a bank in a comparable situation.


===Indirect taxes===  
===Indirect taxes===  
The general rate of VAT is 20%. Two different reduced rates of 10% and 5.5% (on essential goods and certain publications) are applicable. A special reduced rate of 2.1% (on certain medicines, newspapers and theatrical events) also exists.
The general rate of VAT is 20%. Two different reduced rates of 5.5% (on essential goods and certain publications) and 10% are applicable. A special reduced rate of 2.1% (on certain medicines, newspapers and theatrical events) also exists.


''Tax information provided by Deloitte Touche Tohmatsu and Deloitte Highlight 2014 (www.deloitte.com).''
''Tax information provided by Deloitte Touche Tohmatsu and Deloitte Highlight 2015 (www.deloitte.com).''


''General information on French taxation is provided on a specialist site of the [http://www.impots.gouv.fr/portal/static/ Ministry of Economy, Industry and Employment] and an English language summary can be found on the [http://www.invest-in-france.org/us Invest in France] website.''
''General information on French taxation is provided on a specialist site of the [http://www.impots.gouv.fr/portal/static/ Ministry of Economy, Industry and Employment] and an English language summary can be found on the [http://www.invest-in-france.org/us Invest in France] website.''


==Banking service provision==
==Banking service provision==
There are 170 commercial banks and 88 branches of foreign banks in France, in addition to 110 savings, co-operative and rural banks. La Banque Postale, the financial arm of the French postal service, La Poste, also provides a wide range of retail services.  
There are 166 commercial banks and 86 branches of foreign banks in France, in addition to 109 savings, co-operative and rural banks. La Banque Postale, the financial arm of the French postal service, La Poste, also provides a wide range of retail services.  
France’s banking sector has experienced some consolidation over the last 15 years, most notably the merger of Banque Nationale de Paris (BNP) and Paribas to form BNP Paribas, and the friendly takeover of Crédit Lyonnais by Crédit Agricole. In April 2009, the French government became the largest shareholder in BNP Paribas with a 17% stake. It does not, however, have voting rights or a seat on the board.
France’s banking sector has experienced some consolidation over the last 15 years, most notably the merger of Banque Nationale de Paris (BNP) and Paribas to form BNP Paribas in 2000, and the friendly takeover of Crédit Lyonnais by Crédit Agricole in 2003. In April 2009, the French government became the largest shareholder in BNP Paribas with a 17% stake. It does not, however, have voting rights or a seat on the board.
In August 2009, Banque Populaire and Caisse d’Epargne merged to form the BPCE Group.  
In August 2009, Banque Populaire and Caisse d’Epargne merged to form the BPCE Group.  
DexMA, the municipal-lending unit of Dexia Crédit Local, was acquired in 2013 by the state-owned Caisse de dépôts et consignations (CDC), La Banque Postale and the French government and was renamed as Caisse Française de Financement Local. Dexia’s remaining ‘toxic’ assets form a ‘bad bank’.
DexMA, the municipal-lending unit of Dexia Crédit Local, was acquired in 2013 by the state-owned Caisse de dépôts et consignations (CDC), La Banque Postale and the French government and was renamed as Caisse Française de Financement Local. Dexia’s remaining ‘toxic’ assets form a ‘bad bank’.
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===Payments===
===Payments===
* '''''Credit transfers''''' – Credit transfers are the most popular method of payment for wages, pensions and social security benefits. In addition, credit transfers are increasingly used to pay suppliers and taxes. Electronic credit transfer types include:
* '''''Credit transfers''''' – Credit transfers are the most popular method of payment for wages, pensions and social security benefits. In addition, credit transfers are increasingly used to pay suppliers and taxes. Migration to SEPA Credit Transfers was completed in France on 1 August 2014.  
** high-value/urgent credit transfer made through the pan-European TARGET2 system;
* '''''Direct debits''''' – Direct debit (avis de prélèvement automatique) is a preauthorised debit on the payer’s bank account initiated by the payee. The advice is sent by the debtor’s financial institution for the automated transfer of funds from the debtor’s account to the creditor’s account at the initiative of the creditor and based on the debtor’s authorisation. Direct debits are commonly used for recurring consumer payments. SEPA Direct Debits (SDDs) were introduced on 2 November 2009. SDDs replaced ordinary legacy direct debits on 1 August 2014.  
** ''virement d’origine extérieure (VOE)'' – a credit transfer issued by a bank located outside France to a bank located in France. The latter is responsible for transmitting all information in its possession, particularly on the currency conversion effected and charges thereon, to the beneficiary’s bank, via CORE;
** ''virement spécifique orienté trésorerie (VSOT)'' – a special interbank transfer for treasury management operations; and
** ''virement commercial (VCOM)'' – irrevocable deferred electronic payment order (for settlement within a period of up to 120 days of issuance), accompanied with commercial data (invoice details), which the remitter’s bank forwards to the beneficiary when issued; there are two types: finançeable (discountable); and non-finançeable (non-discountable). In the former case, creditors can obtain immediate value (less interest charges) by discounting the payment with the bank on which the transfer is issued.
Migration to SEPA Credit Transfers is to be completed by August 2014.
* '''''Direct debits''''' – Direct debit (avis de prélèvement automatique) is a preauthorised debit on the payer’s bank account initiated by the payee. The advice is sent by the debtor’s financial institution for the automated transfer of funds from the debtor’s account to the creditor’s account at the initiative of the creditor and based on the debtor’s authorisation. Direct debits are commonly used for recurring consumer payments. SEPA Direct Debits (SDDs) were introduced on 2 November 2009. Migration to SDDs is to be completed by August 2014.  
* '''''Cheques''''' – Cheques were traditionally the dominant cashless payment instrument in terms of both volume and value. However, the use of cheques in France has declined in favour of electronic alternatives. Cheque usage is now mainly retail.
* '''''Cheques''''' – Cheques were traditionally the dominant cashless payment instrument in terms of both volume and value. However, the use of cheques in France has declined in favour of electronic alternatives. Cheque usage is now mainly retail.
* '''''Payment cards''''' – The payment card is now the most commonly used cashless payment instrument in France. The Visa France debit card is the country’s most popular payment card. The majority of cards in France carry a Bank Card Consortium (Groupement des Cartes Bancaires – GCB) logo. The GCB has established agreements with both Visa and MasterCard and cards issued in France are generally co-branded. The country’s electronic purse scheme, Moneo, has been integrated into France’s payment cards by the GCB.
* '''''Payment cards''''' – The payment card is now the most commonly used cashless payment instrument in France. The Visa France debit card is the country’s most popular payment card. The majority of cards in France carry a Bank Card Consortium (Groupement des Cartes Bancaires – GCB) logo. The GCB has established agreements with both Visa and MasterCard and cards issued in France are generally co-branded. The country’s electronic purse scheme, Moneo, has been integrated into France’s payment cards by the GCB.
* '''''Other payments'''''
* '''''Other payments'''''
** ''A télérèglement (TLR)'' is an electronic payment order that allows remote payment for goods and services via internet or telephone. This is designed as an alternative for customers reluctant to use direct debits owing to the tacit agreement to the amount debited that they imply. The creditor must receive the customer’s agreement before issuing the TLR. In terms of processing, the TLR works as a direct debit order.  
** ''A télérèglement (TLR)'' is a niche electronic payment order that allows remote payment for goods and services via internet or telephone. This is designed as an alternative for customers reluctant to use direct debits owing to the tacit agreement to the amount debited that they imply. The creditor must receive the customer’s agreement before issuing the TLR. In terms of processing, the TLR works as a direct debit order.  
** ''A titre interbancaire de paiement (TIP)'' is a preformatted payment order that allows remote payments. The creditor is able to retain the initiative in recovering claims and the payer is able to agree explicitly to each separate payment. When each debt falls due (or has fallen due), the creditor sends the customer a bill or notice of instalment due, with an attached TIP, which the payer is required to sign, date and return within the time limit stipulated by the creditor. TIPs are widely used for regular payments such as utility payments and tax instalments.
** ''A titre interbancaire de paiement (TIP)'' is a preformatted payment order that allows remote payments. The creditor is able to retain the initiative in recovering claims and the payer is able to agree explicitly to each separate payment. When each debt falls due (or has fallen due), the creditor sends the customer a bill or notice of instalment due, with an attached TIP, which the payer is required to sign, date and return within the time limit stipulated by the creditor. TIPs are widely used for regular payments such as utility payments and tax instalments.
** ''A lettre de change relevé (LCR)'' is an electronic commercial trade bill, the functionality of which resembles that of a future-dated cheque. It represents an order from one party (the drawer) to another (the drawee) to pay a specified sum on demand or on a specified date to the drawer or to a third party specified by the drawer. The LCR is widely used to finance trade and, when discounted with a financial institution, to obtain credit.
** ''A lettre de change relevé (LCR)'' is an electronic commercial trade bill, the functionality of which resembles that of a future-dated cheque. It represents an order from one party (the drawer) to another (the drawee) to pay a specified sum on demand or on a specified date to the drawer or to a third party specified by the drawer. The LCR is widely used to finance trade and, when discounted with a financial institution, to obtain credit.
A billet à ordre relevé (BOR) is an electronically processed promissory note.
A billet à ordre relevé (BOR) is an electronically processed promissory note.
In theory, LCRs are issued by the creditor for acceptance by the debtor, while BORs are debtor-initiated instruments. However, in practice, the majority of LCRs are issued by the debtor, who accepts and sends the LCR to the creditor. Both instruments are truncated when cleared, and customers are notified about the value of the payment four days in advance through the use of an electronic or paper-based advice (relevé).
In theory, LCRs are issued by the creditor for acceptance by the debtor, while BORs are debtor-initiated instruments. However, in practice, the majority of LCRs are issued by the debtor, who accepts and sends the LCR to the creditor. Both instruments are truncated when cleared, and customers are notified about the value of the payment four days in advance through the use of an electronic or paper-based advice (relevé).
TLR, TIP, LCR and BOR will all remain operational after 1 August 2014.
The LCR and BOR remain operational. The TLR and TIP will only remain in operation until 1 February 2016


==Cash and bank account management==
==Cash and bank account management==
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France has established a financial intelligence unit (FIU), the unit for Treatment of Intelligence and Action against Clandestine Financial Networks Unit (TRACFIN), which is a member of the Egmont Group.
France has established a financial intelligence unit (FIU), the unit for Treatment of Intelligence and Action against Clandestine Financial Networks Unit (TRACFIN), which is a member of the Egmont Group.


''Supplied by BCL Burton Copeland ([http://www.bcl.com www.bcl.com]). Data as at January 2014.''
''Supplied by BCL Burton Copeland ([http://www.bcl.com www.bcl.com]). Data as at January 2015.''


===Cash concentration===
===Cash concentration===
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Electronic banking services on offer generally include intra-day reporting, transaction initiation services and end-of-day sweeping arrangements, on both a domestic and international scale.
Electronic banking services on offer generally include intra-day reporting, transaction initiation services and end-of-day sweeping arrangements, on both a domestic and international scale.
Internet banking is offered by most banks in France, but remains mainly retail orientated. ASP software for electronic banking via the internet, previously only offered by independent software houses, has been integrated into many banks’ proprietary packages.
Internet banking is offered by most banks in France, but remains mainly retail orientated. ASP software for electronic banking via the internet, previously only offered by independent software houses, has been integrated into many banks’ proprietary packages.
Mobile banking is offered by many of the country’s banks, but remains mainly retail-orientated.


==Liquidity management==  
==Liquidity management==  
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'''National Institute of Statistics  
'''National Institute of Statistics  
* [http://www.insee.fr http://www.insee.fr]  
* [http://www.insee.fr http://www.insee.fr]  
'''Invest in France'''  
'''Business France'''  
* [http://www.invest-in-france.org http://www.invest-in-france.org]  
* [http://www.sayouitofrance-innovation.com http://www.sayouitofrance-innovation.com]  
'''Stock Exchange – NYSE Euronext'''  
'''Stock Exchange – Euronext'''  
* [https://europeanequities.nyx.com https://europeanequities.nyx.com]
* [https://www.euronext.com https://www.euronext.com]
'''Assembly of French Chambers of Commerce and Industry'''  
'''Assembly of French Chambers of Commerce and Industry'''  
* [http://www.cci.fr http://www.cci.fr]
* [http://www.cci.fr http://www.cci.fr]
'''French Accountancy Association'''
* [http://www.experts-comptables.com http://www.experts-comptables.com]


[[Category:Book_Export]]
[[Category:Book_Export]]

Revision as of 16:15, 13 October 2015


KEY COUNTRY FACTS
Flag of France
System of government: presidential republic
Population: 66.55 million
Currency: euro (€)
FX regime: free float
GDP: US$2.129 trillion (2014 est)
IGTA member: yes
FATF member: yes
Treasury association: French Association of Corporate Treasurers
Other professional financial/banking associations:

French Banking Federation

Association of French Banks

French Association of Credit Institutions and Investment Firms


Financial regulatory framework

Bank supervision

On 4 November 2014, the European Central Bank (ECB) adopted the authority to monitor the financial stability of banks within the eurozone through its Single Supervisory Mechanism (SSM), in line with the EU’s SSM Regulation No 1024/2013 conferring specific tasks on the ECB with regard to the prudential supervision of credit institutions. The ECB has final supervisory authority, with member states’ national supervisory authorities now providing a supporting role. The ECB directly supervises the 120 “most significant” banks within each eurozone member state. The ECB is responsible for supervisory reviews, on-site inspections and investigations; granting/withdrawing banking licences; assessing bank acquisitions; ensuring compliance with EU prudential rules; and, if required, setting higher capital requirements to counter financial risks. France’s national supervisory authorities include the Autorité de Contrôle Prudentiel et de Résolution (ACPR) grants licences to and supervises banks and credit institutions. The Comité Consultatif du Secteur Financier (CCSF) monitors the interaction between the credit institutions and their clients. The Minister for the Economy and Finance is directly responsible for regulating the banking and insurance sectors after consultation with the Comité Consultatif de la Législation et de la Réglementation Financières (CCLRF). The CCLRF is mandated to opine on any proposed proscriptive texts relative to banking, finance and insurance (laws, orders, decrees and decisions, as well as any European regulations and directives) before they are adopted and become definitive.

Exchange controls

Controls apply to foreign investment from outside the EU in airlines and French flag shipping vessels (where majority ownership is prohibited). Restrictions also apply to foreign investors from outside the EU in acquiring vineyards, establishing agriculture businesses, and setting up branches of insurance companies.

Taxation framework

Tax on corporate income

France imposes corporate income taxation (CIT) at a standard rate of 33.3%, together with a social contribution tax of 3.3% on the amount of the CIT in excess of €763,000. A 10.7% temporary surtax applies to the standard corporate income tax liability for large companies with turnover exceeding EUR 250m, resulting in an overall effective corporate tax rate of 36.9%, or 38% for the largest companies when subject to the 3.3% social charge. Companies are taxed only on profits arising through a business entity operating in France and are subject to additional levies, including a local business tax and payroll taxes. Resident companies are taxed on any domestic or foreign ‘passive investment income’ not derived from a foreign permanent establishment. Foreign passive investment income includes royalties, interest, gains and dividends (unless the dividends are received under a participation exemption, in which case only 5% of the dividends are taxable). A participation exemption on dividends applies where the recipient owns at least 5% of the shares (both by vote and value) of the distributing entity and retains the shares for at least 24 months. If the participation exemption applies, the dividends are 95% exempt, resulting in a maximum effective rate of 1.9% (5% x 38%). However, if an entity is merged shortly after making a distribution and the merger is within two years of its acquisition, the parent company must choose between having the distribution within the scope of the participation exemption and taking a deduction for the loss on the shares of the distributing entity.

Capital gains tax

Taxable gains are calculated by deducting the net book value of an asset from the sale proceeds, and are included in operating profits and taxed at the normal corporate tax rate. A participation exemption applies to capital gains arising from the sales of shares that form part of a substantial investment if the shares have been held for 24 months. The gain is 88% exempt, resulting in a maximum effective rate of 4.56%.

Taxation of dividends and interest

Withholding tax applies to dividends and payments to non-resident companies for services rendered in France. Dividends paid to non-resident companies are subject to withholding tax at a rate of 30% unless a reduced treaty rate applies or the recipient is a company located in another EU member state. No withholding tax applies to interest.

Thin capitalisation

Thin capitalisation rules apply to interest paid to related parties (controlled directly or indirectly through common shareholders) and interest on third-party debt guaranteed by a related party if it simultaneously exceeds all of the three following thresholds:

  • a related party debt/equity ratio of 1.5:1 (replacing the previous debt-to-share capital ratio);
  • 25% of adjusted current profits (i.e. pre-tax operating and financial profits, increased by items such as intragroup interest and depreciation) for the year; and
  • interest income received from related parties (if the company uses the funds to finance other affiliated companies).

Transfer pricing

French entities controlled by entities established outside France are taxable in France on profits transferred, directly or indirectly, to the entity located abroad through an increase or decrease in the purchase or sales prices or by any other means. Companies exceeding certain thresholds must maintain contemporaneous transfer pricing documentation. The documentation has to be drafted under a specific format, which includes a master file (describing the group organisation) and a country file (describing the company’s roles). The penalty for failing to provide the documentation is 5% of any transfer pricing reassessment, with a minimum of EUR 10,000 per fiscal year. Interest rates charged by related parties are deemed to be at arm’s length if they do not exceed the average rate charged by banks to French businesses on loans with terms of two years or longer. Appropriate documentation (e.g. a bank quotation) should be made available to support higher rates. If the interest rate exceeds that index, the taxpayer will have to demonstrate that it would have paid a similar or higher rate to a bank in a comparable situation.

Indirect taxes

The general rate of VAT is 20%. Two different reduced rates of 5.5% (on essential goods and certain publications) and 10% are applicable. A special reduced rate of 2.1% (on certain medicines, newspapers and theatrical events) also exists.

Tax information provided by Deloitte Touche Tohmatsu and Deloitte Highlight 2015 (www.deloitte.com).

General information on French taxation is provided on a specialist site of the Ministry of Economy, Industry and Employment and an English language summary can be found on the Invest in France website.

Banking service provision

There are 166 commercial banks and 86 branches of foreign banks in France, in addition to 109 savings, co-operative and rural banks. La Banque Postale, the financial arm of the French postal service, La Poste, also provides a wide range of retail services. France’s banking sector has experienced some consolidation over the last 15 years, most notably the merger of Banque Nationale de Paris (BNP) and Paribas to form BNP Paribas in 2000, and the friendly takeover of Crédit Lyonnais by Crédit Agricole in 2003. In April 2009, the French government became the largest shareholder in BNP Paribas with a 17% stake. It does not, however, have voting rights or a seat on the board. In August 2009, Banque Populaire and Caisse d’Epargne merged to form the BPCE Group. DexMA, the municipal-lending unit of Dexia Crédit Local, was acquired in 2013 by the state-owned Caisse de dépôts et consignations (CDC), La Banque Postale and the French government and was renamed as Caisse Française de Financement Local. Dexia’s remaining ‘toxic’ assets form a ‘bad bank’. Several foreign banks have acquired substantial footholds in the French market.

Clearing and payment systems

Clearing systems

  • TARGET2-Banque de France is the country’s national component of the pan-European TARGET2 RTGS system.
  • CORE is a multilateral deferred net settlement system for retail payments. CORE is operated by Technological Systems for Exchanges and Processing (Systèmes Technologiques d’Echange et de Traitement – STET).
  • Cross-border payments in € can be made through the Euro Banking Association’s EURO1, STEP1 or STEP2 payments systems.
  • International payment transfers can also be routed via SWIFT through correspondent banking arrangements.

Payments

  • Credit transfers – Credit transfers are the most popular method of payment for wages, pensions and social security benefits. In addition, credit transfers are increasingly used to pay suppliers and taxes. Migration to SEPA Credit Transfers was completed in France on 1 August 2014.
  • Direct debits – Direct debit (avis de prélèvement automatique) is a preauthorised debit on the payer’s bank account initiated by the payee. The advice is sent by the debtor’s financial institution for the automated transfer of funds from the debtor’s account to the creditor’s account at the initiative of the creditor and based on the debtor’s authorisation. Direct debits are commonly used for recurring consumer payments. SEPA Direct Debits (SDDs) were introduced on 2 November 2009. SDDs replaced ordinary legacy direct debits on 1 August 2014.
  • Cheques – Cheques were traditionally the dominant cashless payment instrument in terms of both volume and value. However, the use of cheques in France has declined in favour of electronic alternatives. Cheque usage is now mainly retail.
  • Payment cards – The payment card is now the most commonly used cashless payment instrument in France. The Visa France debit card is the country’s most popular payment card. The majority of cards in France carry a Bank Card Consortium (Groupement des Cartes Bancaires – GCB) logo. The GCB has established agreements with both Visa and MasterCard and cards issued in France are generally co-branded. The country’s electronic purse scheme, Moneo, has been integrated into France’s payment cards by the GCB.
  • Other payments
    • A télérèglement (TLR) is a niche electronic payment order that allows remote payment for goods and services via internet or telephone. This is designed as an alternative for customers reluctant to use direct debits owing to the tacit agreement to the amount debited that they imply. The creditor must receive the customer’s agreement before issuing the TLR. In terms of processing, the TLR works as a direct debit order.
    • A titre interbancaire de paiement (TIP) is a preformatted payment order that allows remote payments. The creditor is able to retain the initiative in recovering claims and the payer is able to agree explicitly to each separate payment. When each debt falls due (or has fallen due), the creditor sends the customer a bill or notice of instalment due, with an attached TIP, which the payer is required to sign, date and return within the time limit stipulated by the creditor. TIPs are widely used for regular payments such as utility payments and tax instalments.
    • A lettre de change relevé (LCR) is an electronic commercial trade bill, the functionality of which resembles that of a future-dated cheque. It represents an order from one party (the drawer) to another (the drawee) to pay a specified sum on demand or on a specified date to the drawer or to a third party specified by the drawer. The LCR is widely used to finance trade and, when discounted with a financial institution, to obtain credit.

A billet à ordre relevé (BOR) is an electronically processed promissory note. In theory, LCRs are issued by the creditor for acceptance by the debtor, while BORs are debtor-initiated instruments. However, in practice, the majority of LCRs are issued by the debtor, who accepts and sends the LCR to the creditor. Both instruments are truncated when cleared, and customers are notified about the value of the payment four days in advance through the use of an electronic or paper-based advice (relevé). The LCR and BOR remain operational. The TLR and TIP will only remain in operation until 1 February 2016

Cash and bank account management

Account availability

Foreign currency accounts can be held by residents both domestically and abroad. Resident accounts in domestic currency (€) may also be held abroad and are convertible into foreign currency. Non-residents can hold foreign currency accounts and domestic currency accounts in France, and accounts in domestic currency can be held abroad. Non-resident accounts in domestic currency are convertible into foreign currency.

Money laundering

France has enacted anti-money laundering legislation, including legislation implementing the three EU anti-money laundering directives (Act No 90-614 of 1990, as supplemented by several legislative instruments, most recently Act No. 2004-130 of 2004, Act No. 2004-204 of 2004, Decree No. 2006-736 of 2006, Law No. 2008-776 of 2008, Decree No. 2009-874 and Decree No. 2009-1087,Decree No. 2012-1125, Law No. 2013-100 of 2013 and Decree No. 2013-183). The Bank of France has also issued related Guidelines. A Financial Action Task Force (FATF) member, France observes most of the FATF-49 standards. It is also a member of the Caribbean Financial Action Task Force (CFATF) as a Co-operating and Supporting Nation, and both the South American Financial Action Task Force (GAFISUD) and the Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG) with observer status. France has established a financial intelligence unit (FIU), the unit for Treatment of Intelligence and Action against Clandestine Financial Networks Unit (TRACFIN), which is a member of the Egmont Group.

Supplied by BCL Burton Copeland (www.bcl.com). Data as at January 2015.

Cash concentration

All the major international and domestic cash management banks offer cash concentration techniques. Cash concentration arrangements are allowed under the following circumstances:

  • The participating companies in the pool must be controlled by one of the participants.
  • The agreement must respect the corporate interest of each participant.
  • The operations must be at arm’s length.
  • All participants need to sign a treasury agreement (convention de trésorerie) detailing the extent and the conditions under which cash pooling can take place.
  • The agreement and cash pool structure must be authorised by a special deliberation of the board (conseil d’administration).
  • In addition, it is recommended that the agreement is submitted to the relevant auditors before presenting it to the board.

Notional pooling

The legal status of notional pooling is uncertain. Under French law, it is difficult to establish the legal validity of the cross guarantees within the framework of a multi-company pooling structure, in order to enable the bank providing the service to be able to get legal right of set-off in the case of bankruptcy. This creates an additional problem for the bank, since without the cross guarantees, it will be unable to net off balances within the notional pooling structure for reporting of regulatory capital purposes. Some banks offer zero-balancing solutions with mirrored accounts as a substitute.

Cross border sweeping

The same restrictions apply to cross border sweeps as those set for domestic cash concentration.

Central Treasury Units

The Central Treasury Unit (centrale de trésorerie) is unique to France and benefits from a special fiscal status that allows its participants not only to avoid withholding taxes on interest paid to a non-resident sister or parent company, but also to dispense with the interest deductibility ceiling. There are five conditions that treasury operations must meet in order to benefit from this special tax status:

  • treasury operations (borrowings and loans) are to involve companies controlled directly or indirectly, pursuant to the stipulations of the Banking Act;
  • the group to which the companies belong must be defined as a multinational corporation, with registered operations in at least three different countries (not limited to Europe alone);
  • fiscally, the operations are to be of a normal managerial nature and be the object of a treasury management agreement signed by all of the group companies involved;
  • movements of funds are to be recorded in specific accounts in order to be traceable with precision in each company concerned; and
  • transactions are to be the object of an annual declaration to the fiscal authorities (indicating the identities of the beneficiaries, the nature of the revenues and the details of taxable amounts).

Electronic and internet banking

All banks offer electronic banking in France, although the products are usually provided by software houses rather than banks. The country’s former ETEBAC transfer protocols have been replaced with EBICS (the German SEPA-compliant IP-based XML-file transfer protocol) and SWIFT for Corporates. Electronic banking services on offer generally include intra-day reporting, transaction initiation services and end-of-day sweeping arrangements, on both a domestic and international scale. Internet banking is offered by most banks in France, but remains mainly retail orientated. ASP software for electronic banking via the internet, previously only offered by independent software houses, has been integrated into many banks’ proprietary packages. Mobile banking is offered by many of the country’s banks, but remains mainly retail-orientated.

Liquidity management

Short-term investments

  • Current accounts – Banks pay interest on deposit accounts in accordance with competitive rates offered in fellow eurozone countries. Interest can be earned on current accounts.
  • Time deposits – Time deposits can be offered with maturities ranging from one week to medium term (maturities over two years are rare).
  • Certificates of deposit (CDs) – Offered by banks, CDs usually have maturities of three to six months although maturities range from one day to one year. CDs can have fixed or variable interest rates and have a minimum value of €150,000.
  • Commercial paper – Offered by companies and public authorities, commercial paper (billet de trésorie – BT) is particularly popular among commercial banks and has a minimum value of €150,000. It can be offered in €, $ or £. Most outstanding BTs are held in OPCVMs (organismes de placement collectif en valeurs mobilières). Commercial paper has a minimum maturity of one day and a maximum maturity of one year. France’s leading banks act as dealers in commercial paper programmes. Issuers rarely distribute commercial paper directly.
  • Mutual funds – OPCVMs are mutual investment funds into which residents can transfer excess funds. OPCVMs are a popular and flexible method of short-term investment. OPCVMs are used to invest in money, bonds or equities.
  • There are two types of OPCVM — the société d’investissement à vapital variable (SICAV — an open-ended investment fund, which has to publish its net asset values on a daily basis) and the fond commun de placement (FCP — a form of unit trust, which is structured so investors co-own the transferable securities purchased by the fund).
  • Treasury bills (bons du Trésor – T-bills) – T-bills are regularly issued to commercial banks and funds by the Agence France Trésor. Discounted T-bills (bonds du Trésor à taux fixe – BTFs) have maturities ranging from two weeks to one year.
  • Repos – France has the busiest repurchase agreement (repo) market in the eurozone. Repos usually have maturities ranging from one day to one week.

Websites

Government

Ministry of the Economy and Finance

Department of the Treasury

Agence France Trésor

Banque de France

Prudential Supervisory Authority

Financial Markets Authority

National Institute of Statistics

Business France

Stock Exchange – Euronext

Assembly of French Chambers of Commerce and Industry

Personal tools