You have received a tax inspection notice. If you understand French, you will realise the request is to ease the work for your inspector. In particular, you will have to provide him with a computerised file of your accounting data.
Don’t panic! You have 15 days to deliver a copy of your accounting entries in ‘FEC‘ format.
We recommend that you cooperate because, after this deadline, the tax administration will come to physically check your accounting documents instead of performing a simple remote check.
All you need to know about the best practice during a tax audit
A “FEC” file must be provided to the tax inspector before the investigations starts.
Please bear in mind that bookkeeping of any company or branch operating in France must comply with French accounting standards (FR GAAP).
Should your entity in France rely on a bookkeeping system based on US GAAP or IFRS accounting standards, then a preliminary conversion into FR GAAP is mandatory. All bookkeeping of companies/branches based in France must be available for consultation in French.
What is a ‘FEC’?
The Fichier des Écritures Comptables (‘FEC’) is basically a computerized accounting entries file, issued by your accounting software.
Compliance with the new regulations is compulsory. If the FEC is not provided to the tax auditor, is incomplete or not compliant with the regulation, it may lead to a rejection of all bookkeeping, including the rejection of all the related returns and taxes (VAT, Financial Statements, corporate tax…).
In such a scenario, the French tax inspector may independently decide to calculate your taxable turnover and profit. Should you disagree with these arbitrary figures (and they can be controversial), it will be your responsibility to disprove them.
Foreign companies that are registered for VAT in France without a permanent establishment are also required to deliver their FEC file upon request from the French tax administration.
Failure to provide the tax auditor with the FEC file is punishable by a fine of €5,000 or 10% of the reassessments, whichever is greater.
We offer the opportunity to test the structure and validity of your ‘FEC’ (Accounting Entries) file to evaluate how this complies with the necessary tax laws in France (pursuant to Article L. 47 A-I of our tax regulations).
Should you need any further information regarding the FEC file, or if you have more complex queries, please do not hesitate to get in touch with us so that we can discuss your situation in more depth.
If you are concerned that your business may not be prepared for a tax audit, or you are seeking assistance in implementing this new obligation, or would simply like more information on the FEC, please do contact us. Our multilingual team of accountants can offer consultation services on the new requirements and the necessary presentation of the FEC file.
Our team of experts will assist you from the collection of your accounting documents to their transmission in FEC format so that you comply with French standards and can send your FEC file to the tax authorities on time.
REF: 002 A new tax law has changed requirements in French tax audit procedure, and your company may be affected. An “FEC” file must now be provided to the tax auditor at the start of any tax audit.