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This chapter is not exhaustive and is limited to broadly outline the tax consequences of the main events occurring when doing business in France. It does not constitute a tax advice or a client - attorney relationship. Materials are not suitable for tax analysis. Visitors are invited to consult a tax lawyer before taking any decision.
 Taxes computed on the taxable result are of two sorts:
 "Current taxes" due for a particular period using taxable income as a base according to the applicable current tax rules ;
"Deferred taxes" reflecting temporary differences i.e. book income includes revenues or expenses in a different accounting period than when they appear in taxable income.
Temporary differences that give rise to future tax liabilities are called "deferred tax liabilities".
Temporary differences that give rise to future tax deductions are called "deferred tax assets".
Temporary differences correspond to differences between the accounting result and the taxable result and also between the accounting result and the consolidated result.
For example temporary differences might occur when the depreciation rules for book purpose and the depreciation rules for tax purpose are different. For example, an expense may be immediately tax deductible while it must be depreciated over a certain period of time for book purpose. In such case, the expense will trigger a deferred tax liability equal to the deny of tax deductibility of the future book depreciation.
Tax losses are another example of temporary differences.
If an enterprise carries losses forward and anticipate future profits sufficient to use part or all of these profits, the related tax losses will give rise to a deferred tax asset up to the amount which will be used before they expire.
As of January 1st, 2005 listed companies in a EU stock market have to calculate, to book and to communicate on their differed taxes according to IAS 12.
When the book value of an asset or a liability differs temporarily “Timing difference” from its tax value (e.g. tax depreciation different from the book depreciation), the difference must be booked in the consolidated accounts as a differed tax equal to the difference in value time the applicable tax rate. However when the difference between books and tax is final “Permanent difference” there is no need to book a differed tax (e.g. Cost not deductible for tax purpose).
As IAS 12 is quite different from French GAAP (CRC, Regulation 99-02) it is necessary to anticipate the consequences of IAS 12 on the differed tax charge and therefore on the effective tax rate. Special care must be given to the calculation of the consequences of the change of method which will modify the equity of the opening balance of the previous year (January 1st, 2004 for companies using the fiscal year).
EU member states have the option to apply IFRS to statutory accounts.
France decided to only apply progressively the IRFS rules to local statutory accounts. As these accounts are used to calculate the taxable result, this convergence will not be tax neutral.
Special care must be given to the depreciation of assets by components which will be now based on the life of each component and no longer on the business customs (Minimum mandatory tax depreciation, business tax basis). The accounting of assets and liabilities at fair market value instead of historical value will also request detailed tax analysis (Capital gain tax, business tax).
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