A foreign parent company can fund its French subsidiary in a matter of hours by sending money to the subsidiary’s bank account. The legal and tax file should take longer. The transfer may be share capital, a shareholder loan, a cash-pooling advance or an amount that has been booked incorrectly. Each qualification changes the documents, corporate approvals, filing route, interest analysis and evidence that the French tax administration can request.
The practical question is often not simply whether a parent may lend to its subsidiary. It is whether the French subsidiary can show, years later, what it received, under which contract, on what repayment terms, at what rate, with which approvals, and whether the loan was declared on Form 2062. This article focuses on the recurring case of a foreign company financing a French SAS or SARL. It explains the threshold for the declaration of a loan, the distinction between Form 2062 and the separate rules for inter-company credit, the 2026 interest rules, and the evidence needed when the rate exceeds the statutory reference rate. It also sets out a recovery plan when the declaration was missed or the parent demands repayment during a difficult cash-flow period.
I. How should a foreign parent loan to a French subsidiary be qualified and declared?
A. Is the advance a loan, capital contribution or cash-pooling operation?
The first document to prepare is a qualification memo, not a tax form. A transfer from the parent should be matched against its legal purpose, the entries in both ledgers and the parties’ conduct. Founders who need the wider map can also consult the firm’s French company-formation and corporate-law hub. A capital contribution increases the subsidiary’s equity and normally follows a corporate decision and a contribution procedure. A loan creates a debt: the subsidiary must, in principle, repay principal, and it may owe interest. A cash-pooling advance is usually part of a wider treasury arrangement in which several group companies lend or borrow through a centralised mechanism. A payment made without a contract, repayment schedule or reliable accounting trail may be treated differently from the label chosen by the group.
A French shareholder loan is often called a compte courant d’associé. Despite the word “account”, it is not the subsidiary’s ordinary bank account. It records an amount that a shareholder has left or made available to the company and that may be repayable. The Conseil d’État gave an important description in its decision of 8 November 2024, no. 470887. The court stated that such sums are, absent a special agreement or provision in the articles, “remboursables à tout moment”. It also held that reciprocal, sufficiently clear entries in the parent’s and subsidiary’s accounts can, unless contrary evidence is produced, show “l’octroi de la mère à sa filiale d’une avance et non d’une libéralité”. That is useful protection against an automatic reclassification as a gift, but it is not a substitute for a signed agreement and consistent records.
The banking-law question must be separated from the tax question. Article L.511-5 of the French Monetary and Financial Code states: “Il est interdit à toute personne autre qu’un établissement de crédit ou une société de financement d’effectuer des opérations de crédit à titre habituel.” A foreign parent that makes one financing advance to its own subsidiary is not automatically conducting a banking business, but repeated lending to unrelated businesses raises a different issue. The group-treasury exception in Article L.511-6 is narrowly worded. It allows a company to “Procéder à des opérations de trésorerie avec des sociétés ayant avec elle, directement ou indirectement, des liens de capital conférant à l’une des entreprises liées un pouvoir de contrôle effectif sur les autres”. The ownership chain, effective control and actual treasury purpose should therefore be documented rather than assumed.
This is also why an ordinary parent loan should not be confused with the statutory “inter-company loan” regime. The latter is a special exception with eligibility conditions linked to the relationship between the lender and borrower, the lender’s accounts and the economic relationship between the companies. The official Service Public Entreprendre guidance on inter-company loans describes those conditions and states that a qualifying loan is declared through Form 2062 within one month. That one-month rule belongs to the special inter-company-loan framework. It should not be copied mechanically onto every related-party loan from a foreign parent. For the ordinary qualifying loan declaration, the company should identify the applicable filing instructions for its status and accounting period and keep the exchange with its Service des impôts des entreprises, or SIE, which means the business tax office.
Prepare the loan instrument before the funds move. It should identify the foreign lender by its full legal name, incorporation country, registered office and registration number; the French borrower by its legal name, registered office and French identifiers; the currency; the amount or commitment ceiling; the drawdown date; the maturity; the repayment schedule; the interest formula; default consequences; any security or subordination; and the law and forum clauses. If the arrangement is a revolving facility, define the commitment, each drawdown and each repayment. If it is a cash pool, attach the treasury agreement and explain why this transfer falls within it. If it is a contribution, follow the capital process and do not leave a debt-shaped accounting entry.
Currency is not a cosmetic detail. A loan in US dollars, pounds sterling or another currency exposes the borrower and lender to exchange movements. The rate analysis must identify the currency in which an independent lender would have priced the same loan. The accounts must preserve the original amount, the euro translation method and the exchange differences. A later spreadsheet that converts a euro rate into a foreign-currency rate without explaining the date, benchmark and risk allocation is weak evidence. The contract should also state who bears transfer risk and whether the parent can demand repayment in the original currency.
The existence of the French subsidiary can be supported with official company documents. The INPI explanation of documents proving a company’s existence distinguishes the attestation of registration in the Registre national des entreprises, or RNE, from the Kbis extract. The RNE is the National Register of Enterprises. A Kbis is the official extract for a legal entity registered in the Registre du commerce et des sociétés, or RCS, the Commercial and Companies Register, issued by the competent commercial court registry, known as the greffe. Put the Kbis or RNE attestation in the closing file with the loan agreement, but do not confuse proof that the company exists with proof that the debt exists.
A simple reconciliation should be completed on the day of funding:
| Check | French subsidiary record | Foreign parent record |
|---|---|---|
| Principal | Bank receipt and loan liability in the same currency and amount | Bank payment and receivable against the named subsidiary |
| Contract | Signed version, approval and drawdown reference | Identical signed version and board or authorised-signatory evidence |
| Interest | Rate, accrual method, calculation and payment ledger | Matching income calculation and payment record |
| Repayment | Schedule, maturity and any consent for changes | Matching receivable reduction and written waiver or amendment |
This reconciliation matters because Article 470887 concerned precisely the evidential value of reciprocal accounting entries. It does not mean that any unexplained debit and credit pair is enough. The entries should be precise, dated, traceable to the bank movement and consistent with a debt that can be called or repaid under the agreed terms. If the parent later waives the debt, converts it into capital or postpones maturity, document that new legal event separately. A silent disappearance of the liability may create a distribution, a taxable benefit or a corporate-law dispute.
B. Who must file Form 2062 and what must the declaration contain?
Form 2062 is the French declaration of a loan contract. The official impots.gouv.fr Form 2062 page reproduces the principle from the tax legislation: “Les personnes qui interviennent à un titre quelconque, dans la conclusion des contrats de prêts ou dans la rédaction des actes qui les constatent sont tenues de déclarer à l’administration la date, le montant et les conditions du prêt ainsi que les noms et adresses du prêteur et de l’emprunteur.” The wording is wider than “the person who clicked send on the bank transfer”. It makes the loan participants and any intermediary pay attention to who concluded or documented the transaction.
For a company borrowing more than €5,000, the public administrative guidance generally directs the borrower to declare the loan to its SIE through Form 2062 with the annual results declaration. The Service Public Entreprendre financing guidance states that a loan above €5,000 is declared “en même temps que votre déclaration annuelle de résultat”. It also explains that multiple individual loans below €5,000 may have to be aggregated when their total exceeds €5,000. The threshold must be tested by the relevant borrower or lender and year, not by splitting one negotiated facility into artificial drawdowns. Bank loans are treated separately: the official Service Public Form 2062 information states that bank loans are not covered by this declaration and that an intermediary who concludes or drafts the loan may carry the declaration responsibility.
The form is administrative evidence, not the loan agreement. Filing Form 2062 does not prove that the interest rate is arm’s length, that the parent had authority to lend, that the company was solvent, or that the funds were used for the stated purpose. Conversely, a missed declaration does not by itself transform every genuine loan into share capital. The correct response is to repair the filing and the underlying file separately. This distinction is important in an audit: the administration may ask one question about the declaration, another about the legal nature of the funds, and a third about interest deductibility.
The declaration pack should contain, at minimum, the following data:
- the date on which the contract was signed and the date on which funds were made available;
- the principal amount, or the maximum commitment and each drawdown if the facility is revolving;
- the currency, maturity, repayment terms, payment dates and any grace period;
- the fixed or variable interest rate, the reference benchmark, the margin and the method used to calculate accrued interest;
- the full legal identity and address of the foreign lender and the French borrower;
- the identity of any bank, treasury centre, adviser or other intermediary involved in concluding or drafting the instrument; and
- the annex or additional schedules needed where several loans, lenders or borrowers must be reported.
For an English-speaking group, the working papers can be bilingual, but the administrative form may be issued only in French. The company should keep a French version of the key terms, with a translation that uses stable definitions for “lender”, “borrower”, “principal”, “maturity”, “interest”, “security” and “subordination”. Do not translate a parent’s “capital contribution” as a loan or a “current account” as a bank current account. When the foreign contract uses a concept unknown to French company law, add a short French-law qualification memo rather than relying on a literal translation.
Check whether the same financing has been reported in another form. A tax return may show interest expense; the annual accounts may show a related-party balance; transfer-pricing documentation may describe an intragroup facility; and a statutory accounts note may identify a material debt. These entries should agree with Form 2062, but they serve different purposes. Article 242 ter(3) of the French General Tax Code, or CGI, requires the declaration of the date, amount and conditions of the loan and the names and addresses of lender and borrower. The current text of Article 242 ter adds that the declaration is made under conditions and deadlines fixed by decree. That means the form’s administrative route should be checked for the company’s accounting period; a group calendar should not rely on a deadline copied from an individual’s income-tax filing.
The threshold is also a poor reason to avoid a written instrument. The official guidance says that several loans under the individual threshold can become reportable when their annual total exceeds the threshold. More importantly, a French tax inspector can ask about a series of payments that economically represents one facility. A parent that sends €4,900 every week should not expect the form to be avoided merely because each bank message has a small number. The substance, the contractual commitment and the annual total should be reviewed together.
If the declaration was omitted, first reconstruct the facts without backdating documents. Build a chronology showing signature, funding, accounting recognition, interest accrual, payments, amendments and repayment. Identify the applicable SIE and prepare the late or corrected declaration with an explanatory letter. Preserve proof of submission. The official financing page states that non-declaration, omissions or inaccuracies are subject to a €150 fine. That amount is only one part of the risk: an incomplete record may lead to a wider discussion about the debt, transfer pricing, interest or a payment that was actually a distribution. Voluntary correction with a coherent file is more defensible than silently changing ledgers after an inquiry has started.
Finally, separate Form 2062 from company-registration formalities. The INPI Guichet unique, the single online business-formality platform operated by the Institut national de la propriété industrielle, handles creation, modification and other business filings. It does not replace the SIE declaration of a loan. The Kbis and RNE documents identify the borrower; they do not constitute Form 2062. A foreign parent should give its French accountant or lawyer the same legal identity data used in the INPI file so that the loan declaration, statutory accounts and company records identify the same entity.
II. How can the French subsidiary secure interest deductibility and defend the file?
A. How should the rate, transfer-pricing evidence and corporate approval be documented?
Interest deduction is a separate test from loan declaration. For a French subsidiary subject to French corporation tax, usually called impôt sur les sociétés or IS, the starting points are Articles 39, 212 and 212 bis of the CGI. Article 39(1)(3) provides that interest paid to associates for money made available to the company is deductible within a reference rate. The official Article 39 text states: “Les intérêts servis aux associés à raison des sommes qu’ils laissent ou mettent à la disposition de la société, en sus de leur part du capital, quelle que soit la forme de la société, dans la limite de ceux calculés à un taux égal à la moyenne annuelle des taux effectifs moyens pratiqués par les établissements de crédit et les sociétés de financement pour des prêts à taux variable aux entreprises, d’une durée initiale supérieure à deux ans.” It then makes the deduction conditional on the capital having been fully paid.
Article 212 applies the rule specifically to related financing. Its current wording says: “Les intérêts afférents aux sommes laissées ou mises à disposition d’une entreprise par une entreprise qui est son associée ou par une entreprise liée, directement ou indirectement, au sens du 12 de l’article 39, sont déductibles” within the statutory rate or, if higher, the rate the borrower could have obtained from independent financial institutions in analogous conditions. A foreign parent normally falls within the associated or linked analysis, but the ownership percentage, control chain and actual transaction still have to be established. Do not assume that a parent’s invoice, group policy or board approval proves the higher rate.
The 2026 framework is especially important for a file prepared now. The tax doctrine explains that the market-rate extension for associated but non-linked enterprises applies to financial years closed from 31 December 2025, while the independent-rate route remains a proof mechanism. For a controlled foreign parent, the practical burden remains: if the group rate exceeds the reference rate, the French borrower should be able to demonstrate what an independent lender would have offered to this borrower for this facility at the relevant date. The updated BOFiP guidance on interest-rate limitation, meaning the official tax doctrine database, says that an offer of financing at the date of the loan can be an example of proof and lists the amount, availability period, currency risk and borrower credit risk among relevant features.
The leading rate case is the Conseil d’État decision of 10 July 2019, no. 429426. It states that the comparable rate is the rate an independent lender would have offered “compte tenu de ses caractéristiques propres, notamment de son profil de risque” for a loan with the same characteristics and in full competition. The decision adds: “L’entreprise emprunteuse, à qui incombe la charge de justifier du taux qu’elle aurait pu obtenir d’établissements ou d’organismes financiers indépendants pour un prêt consenti dans des conditions analogues, a la faculté d’apporter cette preuve par tout moyen.” “By any means” does not mean “with no method”. It means the borrower may use appropriate contemporaneous evidence rather than one prescribed document.
A defensible rate memo should therefore compare like with like. Record the principal, currency, term, amortisation, drawdown pattern, fixed or floating character, security, ranking, guarantees, permitted use, financial covenants, early repayment rights, borrower credit profile and any group support. Obtain a real bank offer or credit indication when possible, dated before or close to the loan. If a bank would require security but the parent loan is unsecured, explain the adjustment. If the parent bears exchange risk or provides a commitment that an independent lender would price, quantify or describe that difference. A generic database average that ignores currency and subordination is less persuasive than a shorter, transaction-specific comparison.
Do not use the parent’s own funding cost as the whole answer. The relevant question is generally the rate the French borrower could have obtained independently, not merely the cost at which the parent raised money. The parent’s funding documents can be useful evidence of the lender’s cost and the facility’s currency, but they do not automatically establish the borrower’s arm’s-length rate. Conversely, a bank offer to a stronger company may not be comparable. The memo should explain the credit gap, the security gap and the difference in maturity.
Article 57 of the CGI provides the cross-border transfer-pricing safeguard. It says that, for businesses dependent on or controlling enterprises outside France, “les bénéfices indirectement transférés à ces dernières, soit par voie de majoration ou de diminution des prix d’achat ou de vente, soit par tout autre moyen, sont incorporés aux résultats accusés par les comptabilités”. Article 209 makes the rules for Articles 34 to 45 and 53 A to 57 relevant when determining profits subject to IS; see the official Article 209 text. An excessive interest charge, an unexplained fee or a waiver that benefits the parent can therefore be examined as part of a broader transfer-pricing question.
The amount of deductible interest can face a second ceiling. Article 212 bis limits net financial expenses for a company outside a tax group to the higher of €3 million or 30% of the relevant tax result, subject to the article’s detailed definitions and exceptions. The official Article 212 bis provisions calculate net financial expenses after applying Article 212 and include interest on all forms of debt. A small subsidiary may never approach the monetary threshold, but a highly leveraged acquisition vehicle or group-financed operating company may. The rate test and the net-finance-cost test should be modelled separately in the tax workpapers.
Corporate approval is part of the evidence, even when the tax calculation is correct. A French SARL is a private limited-liability company; a French SAS is a simplified joint-stock company. For a SARL, Article L.223-19 of the Commercial Code requires the manager or statutory auditor, when one exists, to present a report on agreements entered into directly or through an intermediary between the company and a manager or associate. The official text states: “Le gérant ou, s’il en existe un, le commissaire aux comptes, présente à l’assemblée ou joint aux documents communiqués aux associés en cas de consultation écrite, un rapport sur les conventions intervenues directement ou par personnes interposées entre la société et l’un de ses gérants ou associés.” The interested manager or associate does not vote under the same provision. Article L.223-20 excludes current operations concluded on normal terms, but a material, bespoke parent financing should not be labelled routine without examining its terms; see the official exception.
For a SAS, Article L.227-10 requires the statutory auditor, or the president if no auditor has been appointed, to report agreements between the company and its president, officer, shareholder holding more than 10% of voting rights, or controlling company. The SAS provision says: “Les associés statuent sur ce rapport.” It also states that an unapproved agreement continues to produce effects, while the interested person and, where applicable, the president and other officers may bear harmful consequences for the company. A one-person SAS follows the special record-keeping rule in the same article. Put the approval, report, register entry or shareholder decision in the loan file and keep the foreign parent’s corresponding authorisation.
Build the evidence in layers:
- Legal layer: signed facility, corporate powers, parent approval, French subsidiary approval, amendments, maturity and repayment clauses.
- Economic layer: business plan, cash requirement, use of funds, liquidity forecast and explanation of why debt rather than equity was selected.
- Pricing layer: bank offers, credit analysis, comparable transactions, currency and security adjustments, calculation of the French reference-rate ceiling and conclusion on the market rate.
- Accounting layer: bank statements, ledger entries, interest accruals, exchange differences, payment confirmations and reconciliation of both companies’ balances.
- Tax layer: Form 2062, annual results return, interest computation, Article 212 and Article 212 bis analysis, transfer-pricing material and any withholding or treaty review that applies to the interest payment.
The file should be understandable to a French inspector who does not know the group’s internal vocabulary. Define every acronym once, identify the entities by registration number and show how the amount moved. If a document is in English, retain the original and a reliable French translation of the operative clauses. If an external rate report uses a database, preserve the search date, filters and underlying comparables. If the rate was fixed during a volatile market, save evidence from the decision date, not just a later annual average.
B. What should a foreign founder do after a missed filing, audit or repayment dispute?
The first response to a missed Form 2062 is a controlled reconstruction. Appoint one person to own the file and freeze informal changes to the accounting narrative. Collect the original parent instruction, bank advices, signed agreements, board minutes, general-ledger extracts, payment schedules, interest invoices, tax returns and correspondence with the accountant. Make a table of every drawdown and repayment. Mark what is proved, what is inferred and what is missing. Do not create a “replacement original” with an old date. Sign a current confirmation or amendment that describes the historical transaction and explains why it is being documented now.
Then test four questions in order. First, was there a genuine debt at the date of the transfer? Second, was the amount and the identity of the parties reported through the proper declaration route? Third, can the French subsidiary defend the interest rate and the amount deducted? Fourth, were the company-law approvals and accounting entries consistent? A late filing may repair the second question while leaving the first, third and fourth unresolved. That is why a form alone is not a complete regularisation.
If the company has received an information request or entered a tax audit, keep communications precise. Give the inspector the contract and a chronological index. Explain any missing approval or late filing without adopting a legal conclusion that the evidence does not support. Reconcile the parent’s receivable with the subsidiary’s liability. Explain every difference caused by exchange rates, accrued interest, withholding, bank fees or a payment made through a treasury centre. If the parent used a group account, identify the actual lender and the contractual chain rather than answering only with the name of the cash-management department.
Quantify the possible adjustments separately. A declaration fine is not the same as a disallowed interest expense. A transfer-pricing adjustment is not the same as a reclassification of debt as equity. A corporate-approval defect is not automatically a tax adjustment. The company should model the reference-rate excess, the market-rate evidence, the net financial expense limitation under Article 212 bis, the effect of any currency movement and any relevant cross-border tax on the interest payment. This separation prevents a small administrative omission from becoming an exaggerated admission about the entire financing.
Repayment deserves its own analysis. Under the facts considered by the Conseil d’État in no. 470887, a shareholder current-account balance was presumed repayable at any time in the absence of a special agreement or statutory provision. That principle may protect the parent’s creditor rights, but an actual facility can contain a fixed maturity, notice period, subordination, financial covenant or standstill. Read the signed contract first. If the parent asks for immediate repayment, check the demand against those terms and against the subsidiary’s ability to pay its due debts. Do not replace a repayment dispute with an undocumented waiver, offset or capital conversion.
A repayment made while the French subsidiary is financially distressed may affect creditors, directors and the parent’s own risk. Obtain a current cash-flow forecast, list due and contingent liabilities, and record the corporate decision. If a refinancing, postponement or partial waiver is negotiated, use a written amendment that states the commercial reason, the new maturity, the interest consequences and the treatment in both ledgers. A parent should avoid sending contradictory instructions—demanding payment in one email while telling the accountant to leave the liability outstanding in another.
When a foreign parent disputes the debt, the same evidence that supports tax treatment supports civil enforcement. The original transfer, the reciprocal entries, the agreement, the approval and the payment schedule establish a coherent chain. The CE no. 470887 decision is particularly helpful where the agreement is imperfect but the accounts are clear; it is not a licence to rely on vague labels. Conversely, a contract with no matching bank transfer or a bank transfer booked as capital can create proof problems even if the parties now agree on the story.
The corrective checklist should be practical:
- Identify every foreign-parent transfer and classify it as capital, loan, current-account advance, cash-pool draw or another payment.
- Match each transfer to the signed instrument, the parent’s authorisation and the French subsidiary’s corporate record.
- Reconcile principal, currency, interest and repayment in both entities’ accounts.
- Determine whether the €5,000 declaration threshold or an aggregation rule applies, and identify the responsible declarant or intermediary.
- Submit or correct the Form 2062 file through the appropriate tax channel, preserving evidence of the submission and explanation.
- Calculate the Article 39 reference-rate ceiling, the Article 212 market-rate alternative and the Article 212 bis net-finance-cost limitation.
- Prepare the independent-lender evidence at the date of the loan, with adjustments for currency, term, security, ranking and credit risk.
- Review cross-border transfer pricing, corporate approvals and any separate tax treatment of interest paid to the foreign parent.
Use a decision table when choosing between correction and renegotiation:
| Finding | Immediate action | Do not do |
|---|---|---|
| Genuine loan, declaration missed, rate within reference ceiling | Reconstruct the file, file or correct Form 2062 and preserve the calculation | Backdate an agreement or describe the loan as capital merely to avoid the form |
| Genuine loan, rate above reference ceiling, contemporaneous bank evidence exists | Prepare an Article 212 market-rate analysis and retain the independent offer | Rely only on the parent’s internal funding cost |
| Genuine loan, rate above ceiling, no reliable evidence | Quantify the exposure and consider a prospective amendment with tax advice | Invent a comparable or alter historic spreadsheets |
| Unclear whether funds were capital or debt | Review bank, ledger, corporate and parent documents before correcting accounts | Make a silent reclassification without an approval and tax analysis |
| Parent demands repayment during cash stress | Read the maturity and standstill terms, model solvency and document the decision | Pay selectively without considering due creditors or the agreed ranking |
International founders should also decide who owns future compliance. The annual calendar should include the loan declaration, interest accrual, repayment dates, corporate approvals, statutory accounts and transfer-pricing review. The foreign parent’s finance team should send the French subsidiary a quarterly balance confirmation that names the facility and currency. The French team should reply with its own ledger balance and flag any payment that does not match the contract. This small control catches a surprising number of errors before an audit or a refinancing.
Finally, obtain a legal review when the arrangement combines several risks: a foreign currency, a cash pool, a parent guarantee, an acquisition debt, a thinly capitalised French subsidiary, a tax-haven concern, an inter-company-loan qualification, a missed declaration or an immediate repayment demand. The question is not only “Can the parent lend?” It is “Can the French company prove the nature, reporting, pricing and governance of the loan at the moment each issue is examined?” That is the standard the file should be designed to meet.
Conclusion
A foreign parent’s transfer to a French subsidiary becomes manageable when the group treats it as a legal transaction rather than a bank instruction. Decide whether it is equity, a shareholder loan, a cash-pool advance or another payment. Sign and approve the right instrument. Reconcile the parent’s receivable with the French company’s liability. Test the Form 2062 threshold and filing responsibility separately from the interest-deduction analysis.
The tax file must then address three distinct ceilings: the Article 39 reference rate, the Article 212 market-rate route supported by independent evidence, and the Article 212 bis limitation on net financial expenses. The exact rate is only one part of the proof. Currency, term, repayment, security, credit risk, corporate approvals, accounting and the date of the evidence matter as well. If a filing was missed, a prompt, honest reconstruction and corrected submission is safer than backdating or quietly reclassifying the transfer. If the parent seeks repayment, the contract, the company’s financial condition and the interests of other creditors must be reviewed together.
Need a quick opinion on your case
A telephone consultation within 48 hours with a lawyer from the firm can review your foreign-parent loan, Form 2062 issue, interest-rate evidence or repayment demand.
We can identify the urgent documents, the French corporate approvals and the tax questions to raise with your accountant or the French tax administration.