France
This report analyses the implementation of the AEOI Standard in France with respect to the requirements of the AEOI Terms of Reference. It assesses both the legal frameworks put in place to implement the AEOI Standard and the effectiveness of the implementation of the AEOI Standard in practice.
The methodology used for the peer reviews and that therefore underpins this report is outlined in Chapter 2.
Overall findings
AEOI legal framework
France’s legal framework implementing the AEOI Standard is in place and is consistent with the requirements of the AEOI Terms of Reference. This includes France’s domestic legislative framework requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures (CR1) and its international legal framework to exchange the information with all of France’s Interested Appropriate Partners (CR2).
Effectiveness of AEOI in practice
France’s implementation of the AEOI Standard is on track with respect to the requirements of the AEOI Terms of Reference to ensure the effectiveness of the AEOI Standard in practice. France is on track with respect to ensuring that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures (CR1). While France is partially compliant with respect to the exchange of information in an effective and timely manner (CR2), it is engaging with partners proactively to resolve the outstanding issues as soon as possible and it is implementing changes to its technical solution to prevent such issues from incurring in future exchanges. France is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
Overall rating in relation to the effectiveness in practice: On Track
General context
France commenced exchanges under the AEOI Standard in 2017.
In order to provide for Reporting Financial Institutions to collect and report the information to be exchanged, France:
enacted Code général des impôts (CGI), art. 1649AC, and CGI, art. 1736,I 5°, Décret n° 2016-1683 du 5 décembre 2016 fixant les règles et procédures concernant l'échange automatique de renseignements relatifs aux comptes financiers, dites « norme commune de déclaration »;
introduced the Arrêté du 9 décembre 2016 précisant le décret n° 2016-1683 du 5 décembre 2016 fixant les règles et procédures concernant l'échange automatique de renseignements relatifs aux comptes financiers, dites « norme commune de déclaration »; as amended by the Arrêté du 10 février 2020;
made reference to the Code monétaire et financier for the purposes of the identification of Controlling Persons under the AEOI Standard.
Under this framework Reporting Financial Institutions were required to commence the due diligence procedures in relation to New Accounts from 1 January 2016. With respect to Preexisting Accounts, Reporting Financial Institutions were required to complete the due diligence procedures on High Value Individual Accounts by 31 December 2016 and on Lower Value Individual Accounts and on Entity Accounts by 31 December 2017.
Following the initial Global Forum peer review, France amended its legislative framework to address issues identified, effective from 16 February 2020.
With respect to the exchange of information under the AEOI Standard, France:
is a Party to the Convention on Mutual Administrative Assistance in Tax Matters and activated the associated CRS Multilateral Competent Authority Agreement in time for exchanges in 2017;
has in place European Directive 2011/16/EU on Administrative Cooperation in the Field of Taxation as amended by Directive 2014/107/EU; and
has in place European Union agreements with five European third countries.1
Table 1 sets out the number of Financial Institutions in France that reported information on Financial Accounts in 2021 as defined in the AEOI Standard (essentially because they maintained Financial Accounts for Account Holders, or that were related to Controlling Persons, resident in a Reportable Jurisdiction). It also sets out the number of Financial Accounts that they reported in 2021. In this regard, it should be noted that France requires the reporting of Financial Accounts based on a prescribed list of exchange partners and some accounts may be required to be reported more than once (e.g. jointly held accounts or accounts with multiple related Controlling Persons), which is reflected in the figures below. These figures provide key contextual information to the development and implementation of France’s administrative compliance strategy, which is analysed in the subsequent sections of this report.
Table 2 sets out the number of exchange partners to which information was successfully sent by France in the past few years (including where the necessary frameworks were in place, containing an obligation on Reporting Financial Institutions to report information, but no relevant Reportable Accounts were identified). These figures provide key contextual information in relation to France’s exchanges in practice, which is also analysed in subsequent sections of this report.
In order to provide for the effective implementation of the AEOI Standard, in France:
the Autorité de contrôle prudentiel et de résolution (ACPR) and the Autorité des marchés financiers (AMF) (the authorities responsible for AML supervision in relation to banking and insurance, and investment management respectively) are the principle authorities responsible to ensure the effective implementation of the due diligence and reporting obligations by Reporting Financial Institutions;
the Direction Générale des Finances Publiques (DGFiP) (the tax authority) has the responsibility of exchanging the information with France’s exchange partners and has complementary responsibilities in ensuring the effective implementation of the due diligence and reporting obligations by Reporting Financial Institutions, including with respect to engaging with partners internationally;
technical solutions necessary to receive and validate the information reported by Reporting Financial Institutions were put in place through an online governmental platform which allows submission of XML files and which carries out validations on the preparation of the file and to ensure that it meets the requirements of the CRS XML Schema; and
the Common Transmission System (CTS), and in the European Union (EU) the Common Communication Network (CCN), are used for the exchange of the information, along with the associated file preparation and encryption requirements.
It should be noted that the review of France’s legal frameworks implementing the AEOI Standard concluded with the determination that France’s domestic and international legal frameworks are In Place. This has been taken into account when reviewing the effectiveness of France’s implementation of the AEOI Standard in practice.
Findings and conclusions on the legal frameworks
The detailed findings and conclusions on the AEOI legal frameworks for France are below, organised per Core Requirement (CR) and sub-requirement (SR), as extracted from the AEOI Terms of Reference (see Annex C).
CR1 Domestic legal framework: Jurisdictions should have a domestic legislative framework in place that requires all Reporting Financial Institutions to conduct the due diligence and reporting procedures in the CRS, and that provides for the effective implementation of the CRS as set out therein.
France’s domestic legislative framework is in place and contains all of the key aspects of the CRS and its Commentary requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures (SRs 1.1 – 1.3). It also provides for a framework to enforce the requirements (SR 1.4).
SR 1.1 Jurisdictions should define the scope of Reporting Financial Institutions consistently with the CRS.
France has defined the scope of Reporting Financial Institutions in its domestic legislative framework in accordance with the CRS and its Commentary.
SR 1.2 Jurisdictions should define the scope of Financial Accounts and Reportable Accounts consistently with the CRS and incorporate the due diligence procedures to identify them.
France has defined the scope of the Financial Accounts that are required to be reported in its domestic legislative framework and incorporated the due diligence procedures that must be applied to identify them in accordance with the CRS and its Commentary.
SR 1.3 Jurisdictions should incorporate the reporting requirements contained in Section I of the CRS into their domestic legislative framework.
France has incorporated the reporting requirements in its domestic legislative framework in accordance with the CRS and its Commentary.
SR 1.4 Jurisdictions should have a legislative framework in place that allows for the enforcement of the requirements of the CRS in practice.
France has a legislative framework in place to enforce the requirements in accordance with the CRS and its Commentary.
CR2 International legal framework: Jurisdictions should have exchange relationships in effect with all Interested Appropriate Partners as committed to and that provide for the exchange of information in accordance with the Model CAA.
France’s international legal framework to exchange the information is in place, is consistent with the Model CAA and its Commentary and provides for exchange with all of France’s Interested Appropriate Partners (i.e. all jurisdictions that are interested in receiving information from France and that meet the required standard in relation to confidentiality and data safeguards) (SRs 2.1 – 2.3).
SR 2.1 Jurisdictions should have exchange agreements in effect with all Interested Appropriate Partners that permit the automatic exchange of CRS information.
France has exchange agreements that permit the automatic exchange of CRS information in effect with all its Interested Appropriate Partners.
SR 2.2 Such an exchange agreement should be put in place without undue delay, following the receipt of an expression of interest from an Interested Appropriate Partner.
France put in place its exchange agreements without undue delay.
SR 2.3 Jurisdictions should ensure that the exchange agreements in effect provide for the exchange of information in accordance with the requirements of the Model CAA.
France’s exchange agreements provide for the exchange of information in accordance with the requirements of the Model CAA.
Findings and conclusions in relation to effectiveness in practice
The detailed findings and conclusions in relation to effectiveness in practice of AEOI for France are below, organised per Core Requirement (CR) and then per sub-requirement (SR) as extracted from the AEOI Terms of Reference (see Annex C).
CR1 Effectiveness in practice: Jurisdictions should ensure that in practice Reporting Financial Institutions correctly implement the due diligence and reporting procedures, which includes a requirement for jurisdictions to have in place an administrative framework to ensure the effective implementation of the CRS.
France’s implementation of the AEOI Standard is on track with respect to ensuring that Reporting Financial Institutions are correctly conducting the due diligence and reporting procedures and are therefore reporting complete and accurate information. This includes ensuring effectiveness in a domestic context, such as through having an effective administrative compliance framework and related procedures (SR 1.5), and collaborating with exchange partners to ensure effectiveness (SR 1.6). France is encouraged to continue its implementation process to ensure its ongoing effectiveness.
SR 1.5 Jurisdictions should ensure that in practice Reporting Financial Institutions identify the Financial Accounts they maintain, identify the Reportable Accounts among those Financial Accounts, as well as their Account Holders, and where relevant Controlling Persons, by correctly conducting the due diligence procedures and collect and report the required information with respect to each Reportable Account. This includes having in place:
an effective administrative compliance framework to ensure the effective implementation of, and compliance with, the CRS. This framework should:
be based on a strategy that facilitates compliance by Reporting Financial Institutions and which is informed by a risk assessment in respect of the effective implementation of the CRS that takes into account relevant information sources (including third party sources);
include procedures to ensure that Financial Institutions correctly apply the definitions of Reporting Financial Institutions and Non-Reporting Financial Institutions;
include procedures to periodically verify Reporting Financial Institutions’ compliance, conducted by authorities that have adequate powers with respect to the reviewed Reporting Financial Institutions, with procedures to access the records they maintain; and
effective procedures to ensure that Financial Institutions, persons or intermediaries do not circumvent the due diligence and reporting procedures;
effective enforcement mechanisms to address non-compliance by Reporting Financial Institutions;
strong measures to ensure that valid self-certifications are always obtained for New Accounts;
effective procedures to ensure that each, or each type of, jurisdiction-specific Non-Reporting Financial Institution and Excluded Account continue to present a low risk of being used to evade tax; and
effective procedures to follow up with a Reporting Financial Institution when undocumented accounts are reported in order to establish the reasons why such information is being reported.
In order to ensure that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures, France implemented most of the requirements in accordance with expectations. However, an issue was identified. The key findings were as follows:
France implemented an overarching strategy to ensure compliance with the AEOI Standard developed after conducting a risk assessment that took into account a range of relevant information sources, such as relevant information held by the AML supervisory authorities and the information reported by Reporting Financial Institutions. France has put in place an administrative framework, including a tripartite steering committee, to ensure effective strategic cooperation between the authorities responsible for ensuring compliance with the AEOI Standard. France’s compliance strategy facilitates compliance and incorporates a credible approach to enforcement. France intends to keep its compliance strategy and risk assessment under review to ensure its effectiveness on an ongoing basis.
France has worked effectively to understand its population of Financial Institutions, including relevant non-regulated entities, utilising various relevant information sources, such as lists of AML supervised Financial Institutions, information obtained from regulated Reporting Financial Institutions on their Financial Institution Account Holders and reports received from Foreign Financial Institutions for FATCA purposes. France is taking action to ensure that Reporting Financial Institutions are classifying themselves correctly under its domestic rules and reporting information as required. France intends to keep its understanding of its Financial Institution population up to date on a routine basis.
The institutions responsible for implementing France’s compliance strategy appear to have the necessary powers and resources to discharge their functions. With respect to resourcing, France utilises existing resources in the supervisory authorities across various teams to monitor and ensure compliance by Reporting Financial Institutions. France has put in place a framework to provide its supervisory authorities with annual risk assessment reports from DGFiP and with access to the information reported by its Financial Institutions to conduct further risk assessments. Overall, they appear to have effectively implemented an operational plan to verify compliance with the requirements, incorporating appropriate compliance activities.
It appears that France effectively enforces the requirements, including through desk-based reviews and onsite visits involving the inspection of records held by Reporting Financial Institutions and the application of dissuasive sanctions. It also appears that France is ready to take effective action to address circumvention of the requirements if such circumvention is detected, and that action is being taken to ensure self-certifications are obtained as required and to follow up on undocumented accounts.
France will also keep its jurisdiction-specific list of Excluded Accounts under review to ensure it continues to pose a low risk of being used for tax evasion purposes. It is noted that France does not have a jurisdiction-specific list of Non-Reporting Financial Institutions for ongoing monitoring.
Table 3 provides a summary of the specific activities undertaken, or that are planned to be undertaken, in relation to each of the key parts of the framework described above.
In terms of the Financial Account information collected and sent by France, while the presence of the key data point of dates of birth appeared to be in line with most other jurisdictions, it was found to include a lower proportion of Tax Identification Numbers with respect to the individuals associated with the accounts when compared to most other jurisdictions. This is a key data point for exchange partners to effectively utilise the information. Information provided by France also showed a higher number of undocumented accounts reported by its Reporting Financial Institutions, when compared to other jurisdictions, which should only occur when it is not possible for the Reporting Financial Institutions to identify whether the accounts are held by Reportable Persons. However, the number of undocumented accounts has reduced over time. Follow-up discussions confirmed that France is aware of these issues and is taking steps to address them.
More generally, many of the exchange partners that received a significant number of records from France indicated that they achieved a success rate when matching the information received from France with their taxpayer database that was broadly equivalent to, or better than, what they usually achieve.
France was not able to confirm that it collects and monitors information on the proportion of Financial Accounts held by Entities that are reported that include information on the Tax Identification Numbers with respect to the Entity Account Holders and their Controlling Persons. However, France is implementing an update to its IT systems to obtain this information in the near future. These data points are key to exchange partners to effectively utilise the information and are important to developing an effective compliance strategy to ensure the AEOI Standard is being effectively implemented.
Based on these findings it was concluded that, overall, France is meeting expectations in ensuring that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures, including by having in place the required administrative compliance framework and related procedures. It was also noted that there is room for improvement with respect to collecting and monitoring information on the Tax Identification Numbers reported in respect of Entity Accounts. France is therefore encouraged to continue its implementation process accordingly, including by addressing the recommendation made.
France should implement systems to collect and monitor information on the Tax Identification Numbers reported in respect of Entity Accounts, in order to inform its compliance strategy.
SR 1.6 Jurisdictions should collaborate on compliance and enforcement. This requires jurisdictions to:
use all appropriate measures available under the jurisdiction’s domestic law to address errors or non-compliance notified to the jurisdiction by an exchange partner; and
have in place effective procedures to notify an exchange partner of errors that may have led to incomplete or incorrect information reporting or non-compliance with the due diligence or reporting procedures by a Reporting Financial Institution in the jurisdiction of the exchange partner.
In order to collaborate on compliance and enforcement, France implemented all of the requirements in relation to issues notified to them (i.e. under Section 4 of the MCAA or equivalent) in accordance with expectations. In particular, France received a notification from one partner and successfully processed it in a timely manner, resolving the issues raised. France also notifies its partners effectively of errors or suspected non-compliance it identifies when utilising the information received.
Based on these findings it was concluded that France is fully meeting expectations in relation to collaborating with its exchange partners to ensure that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures. France is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
CR2 Effectiveness in practice: Jurisdictions should exchange the information effectively in practice, in a timely manner, including by sorting, preparing, validating and transmitting it in accordance with the AEOI Standard.
France’s implementation of the AEOI Standard is partially compliant with respect to exchanging the information effectively in practice and in a timely manner. More specifically, while France is meeting expectations with respect to correctly transmitting the information and in a timely manner (SRs 2.5 – 2.8), and providing corrections, amendments or additions to the information (SR 2.9), there are fundamental issues with respect to France sorting, preparing and validating the information (SR 2.4). France should continue its implementation process to ensure its effectiveness, including by addressing the recommendations made.
SR 2.4 Jurisdictions should sort, prepare and validate the information in accordance with the CRS XML Schema and the associated requirements in the CRS XML Schema User Guide and the File Error and Correction-related validations in the Status Message User Guide (i.e. the 50000 and 80000 range).
24 exchange partners highlighted particular issues with respect to preparation and format of the information sent by France (representing 34% of its partners). These generally related to reporting errors in respect of the Tax Identification Numbers, the use of the same MessageRefID and anomalies in respect of the Residence Country Codes. More generally, 17 (or 24%) of France’s exchange partners reported rejecting more than 25% of the files received, of which 10 (or 14%) reported rejecting more than 50% of files received, due to the technical requirements not being met. This is a very high amount when compared to other jurisdictions and it has increased over time. The highlighted errors and rejections stemmed primarily from two significant issues that France encountered with its technical solution in 2021, namely widespread issues with the transmission of Tax Identification Numbers with respect to the information for calendar year 2020, and the sending of duplicate files which led to the re-use of the MessageRefID and subsequent file rejection by the exchange partners. France has been active in engaging with exchange partners and is implementing a remediation plan to correct the issues. France is also implementing a new technical solution to ensure that data is sent correctly in future exchanges.
Based on these findings it was concluded that France is not meeting expectations in relation to sorting, preparing and validating the information. More specifically, fundamental issues have been identified, including with respect to ensuring that all information is correctly sorted, prepared and exchanged, and that files are sent in line with the requirements of the AEOI Standard and the CRS XML Schema. France should therefore continue its implementation process accordingly, including by addressing the recommendations made.
France should continue to work with its exchange partners to address the issues raised.
France should review its systems and procedures for sorting, preparing and validating the information to send to its exchange partners, to ensure they meet the requirements of the AEOI Standard.
SR 2.5 Jurisdictions should agree and use, with each exchange partner, transmission methods that meet appropriate minimum standards to ensure the confidentiality and integrity of the data throughout the transmission, including its encryption to a minimum secure standard.
In order to put in place an agreed transmission method that meets appropriate minimum standards in confidentiality, integrity of the data and encryption for use with each of its exchange partners, France linked to the CTS and the CCN, which is used for exchanges within the EU.
Based on these findings it was concluded that France is fully meeting expectations in relation to agreeing and using appropriate transmission methods with each of its partners. France is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.6 Jurisdictions should carry out all exchanges annually within nine months of the end of the calendar year to which the information relates.
Feedback from France’s exchange partners did not raise any concerns with respect to timeliness of the exchanges by France and therefore with respect to France’s implementation of this requirement.
Based on these findings it was concluded that France is fully meeting expectations in relation to exchanging the information in a timely manner. France is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.7 Jurisdictions should send the information in accordance with the agreed transmission methods and encryption standards.
Feedback from France’s exchange partners did not raise any concerns with respect to France’s use of the agreed transmission methods and therefore with France’s implementation of this requirement.
Based on these findings it was concluded that France is fully meeting expectations in relation to sending the information in accordance with the agreed transmission methods and encryption standards. France is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.8 Jurisdictions should have the systems in place to receive information and, once it has been received, should send a status message to the sending jurisdictions in accordance with the CRS Status Message XML Schema and the related User Guide.
14 exchange partners highlighted delays in the sending of status messages by France, representing 13% of its partners, with two relating to pre-2021 exchanges. Five of the delays were limited to 15 days or less. This represents a very high proportion of partners and has not improved over time. These delays predominantly stemmed from a temporary system issue that prevented the automatic generation of status messages. It was noted that France appears to have addressed the issues to ensure that status messages are sent in accordance with the requirements in the future. Furthermore, while most of the status messages due have now been sent, France has still not yet sent all of the status messages due to be sent in relation to previous exchange cycles.
Based on these findings it was concluded that, overall, France is meeting expectations in relation to the receipt of the information. It was also noted that there is room for improvement with respect to sending a status message to partner jurisdictions in a timely manner. France is encouraged to continue to ensure the ongoing effectiveness of its implementation, including in relation to the area highlighted.
France should ensure it sends status messages to all of its exchange partners in a timely manner.
SR 2.9 Jurisdictions should respond to a notification from an exchange partner as referred to in Section 4 of the Model CAA (which may include Status Messages) in accordance with the timelines set out in the Commentary to Section 4 of the Model CAA. In all other cases, jurisdictions should send corrected, amended or additional information received from a Reporting Financial Institution as soon as possible after it has been received.
France has responded to a notification and provided corrected, amended or additional information in a timely manner and no such concerns were raised by France’s exchange partners and therefore with respect to France’s implementation of these requirements.
Based on these findings it was concluded that France is fully meeting expectations in relation to responding to notifications from exchange partners and the sending of corrected, amended or additional information. France is encouraged to continue to ensure the ongoing effectiveness of its implementation.
Note
← 1. Andorra, Liechtenstein, Monaco, San Marino and Switzerland.