Receiving a French corporate tax reassessment is not the same as receiving an ordinary tax bill. The document may be a proposition de rectification, the French tax authority’s proposed adjustment, and it starts a procedural timetable in which the company must preserve its objections, identify the evidence relied on and protect its right to challenge the amount. For a foreign founder, the risk is often amplified by distance, time zones, translated accounting records, a French accountant who holds the files, and a parent company whose contracts or payments sit outside France.

The immediate objective is therefore not to send a general disagreement. It is to determine which tax periods are involved, whether the procedure is a desk review or an accounting audit, how the fichier des écritures comptables (FEC, the French computerized accounting entries file) was used, and whether the proposed French corporate income tax (impôt sur les sociétés, or IS) has been calculated from the correct facts. The response must also address penalties, interest, transfer pricing and any allegation that the business was actually carried on in France before the founder reported it.

This guide follows the French Tax Procedure Code, called the Livre des procédures fiscales (LPF), the French General Tax Code, called the Code général des impôts (CGI), and recent decisions of the Conseil d’État. It is designed for a foreign-owned French company and links to the existing French company formation and foreign-founder compliance hub. It does not replace a review of the company’s notice, accounts, tax treaty and evidence by counsel.

I. What should a foreign founder check when a French corporate tax reassessment arrives?

A. Is the notice valid, and what does the thirty-day response period cover?

A reassessment can follow a control on documents, a verification of accounting at the company’s premises, or an examination of accounting performed remotely from electronic files. The label used by the administration matters because different procedural safeguards may apply. A foreign founder should first photograph or download every page, record the date and method of receipt, and identify the service that signed the letter. The Direction générale des finances publiques (DGFiP, the French Directorate General of Public Finances) may correspond with the company through its professional tax account, by post or through an authorised representative. A message seen by the accountant is not automatically the same thing as a notice validly received by the company; the delivery trail should be preserved.

For a verification of accounting or an examination of accounting, Article L. 47 of the LPF requires advance information and identifies the years under review. It also requires the notice to mention the taxpayer’s right to assistance. The wording that must appear is la faculté de se faire assister par un conseil de son choix. The company should compare the years stated in the notice with the periods actually examined. A mismatch, an unclear notice or a missing reference to the right to counsel may create a procedural issue, but the company should still prepare a substantive response rather than assume that a procedural argument will end the matter.

The letter that proposes the adjustment is normally the decisive first document. Under Article L. 57 of the LPF, the proposal must be reasoned so that the taxpayer can respond. The official text requires a proposal that doit être motivée de manière à lui permettre de formuler ses observations. The proposal should identify the facts, legal provisions, accounting entries, tax years and method that led to each adjustment. It should not be treated as a short summary that can be answered later. If a paragraph simply asserts that a cost is non-deductible, or that a foreign payment is a distribution, ask the administration to identify the factual and legal path from the entry to the proposed tax base.

Article R*57-1 of the LPF adds that the proposal must explain the nature and reasons of the adjustment and invite observations within thirty days. The operative wording is dans un délai de trente jours à compter de la réception de la proposition. The starting point is receipt, not the date printed on the proposal and not the date on which a director abroad first opens the attachment. If the company needs more time, its written request should be made before the original period expires and should be retained with proof that the tax service received it. Under Article L. 57, the statutory extension is thirty days when the conditions for the request are met.

The first response should state whether the company disputes the adjustment in full, accepts part of it, or needs documents before it can give a complete answer. It should not use a vague formula such as “we disagree with the French tax authority.” A workable response identifies each proposed adjustment by page, tax year and amount, then separates the factual objection, the legal objection, the accounting evidence and the requested correction. If a document is held by the foreign parent, send a copy with a short explanation of its date, author, currency and relevance. If a document is not yet available, say what has been requested and ask the administration to take it into account when the complete evidence arrives.

The financial consequences must also be checked at this stage. Article L. 48 of the LPF requires the administration, before the taxpayer responds, to state the amount of the duties, taxes and penalties resulting from the proposed adjustments. The relevant part refers to le montant des droits, taxes et pénalités résultant de ces rectifications. A missing or materially misleading calculation can affect the company’s ability to decide how to respond. It does not justify silence: the response should ask for a corrected computation and challenge the underlying adjustment and penalties within the same deadline.

The Conseil d’État confirmed the practical importance of that amount in its decision of 24 February 2026, no. 495116. The Court held that the indication of the financial consequences constitue une garantie pour la société vérifiée in a company audit. The official decision of 24 February 2026, no. 495116 should be read with the facts of the individual case, including whether the company belonged to a tax-integrated group. For an ordinary foreign-owned company, the absence of a clear amount should be recorded as a specific procedural objection, while the business case against the adjustment is developed in parallel.

Before the thirty-day period is allowed to run, the founder, director and advisers should hold a short evidence meeting. The meeting should confirm:

• the date and method of receipt, the tax service and the tax periods concerned;
• the proposed IS, Value Added Tax, withholding tax or other amounts, separated from late interest and penalties;
• the accounting software, FEC version, chart of accounts, general ledger and tax packages used for each period;
• the person authorised to sign observations and the mandate allowing a French lawyer or accountant to act;
• the location of contracts, invoices, bank records, board decisions, staff records and email evidence; and
• the precise date on which the initial observations must be received by the administration.

If the founder lives outside France, a power of attorney should define who may receive correspondence, speak with the tax officer, sign observations and negotiate a payment arrangement. The company’s French registered-office provider may receive corporate mail, but it should not be assumed to have authority to answer a tax reassessment. The company should also check its Kbis, the official extract showing the company’s registration details, against the current director, registered office and legal name. The Kbis is issued through the French commercial registry; it is not proof that the taxable activity, management or accounting evidence was located where the document suggests.

B. How can the company audit the FEC, calculations and third-party evidence?

The FEC is often the technical centre of a French company tax audit. It is not a generic spreadsheet. It is a structured electronic export of the accounting entries for a period, with fields that allow the administration to test dates, journals, account numbers, debit and credit amounts, references and the connection between the ledger and the tax return. The company should keep the original export supplied to the administration, the software version used to create it, the export date, the person who produced it and a read-only copy. If a new FEC is supplied, the company should explain what has changed and why; silently replacing the first file can create a credibility problem.

Article L. 47 A of the LPF requires an electronically accounted taxpayer subject to a verification of accounting to provide une copie des fichiers des écritures comptables at the beginning of the control. Where the administration plans computer processing, it must describe the requested investigation in writing. The provision also contemplates a fifteen-day period for copies of documents, data and processing when the relevant option has been formalised. The taxpayer should therefore compare the administration’s request, the chosen option, the files transmitted and the processing results described in the proposal.

That comparison should be numerical, not rhetorical. Recalculate the proposed adjustment from the ledger and prepare a bridge from the company’s filed taxable result to the administration’s result. The bridge should show the account, journal, entry date, supplier or customer, net amount, tax treatment, evidence held and the reason the administration changed the treatment. Reconcile the bridge to the tax return and to the amount in the proposal. A small difference repeated across thousands of entries may be a mapping error; a single large entry may be a classification dispute. Both need a different answer.

The main evidence set for a foreign-owned company will usually include:

• the signed customer and supplier contracts, with the parties, governing law, place of performance and payment terms;
• invoices, credit notes, delivery evidence, work product and correspondence showing what was actually supplied;
• French and foreign bank statements reconciled to the general ledger, including currency conversion records;
• employment contracts, travel records, calendars and board minutes showing where decisions and services took place;
• the foreign parent’s intercompany agreements, cost allocations, royalty or interest calculations and supporting benefit analysis;
• the tax return, accounting package, FEC, fixed-asset schedule, provisions and evidence for deductible charges; and
• the company’s registration and governance documents, including articles, Kbis, shareholder register and relevant filings made through the INPI portal.

INPI means the Institut national de la propriété industrielle, the National Institute of Industrial Property. Its online formalities portal is used for business filings and feeds the Registre national des entreprises (RNE, the National Register of Enterprises). A filing through INPI, an extract from the RNE or a Kbis can support the chronology of incorporation and registration. None of those records, by itself, decides where the company’s management, staff, customers or income-producing functions were located. Tax analysis follows the actual activity and the relevant tax treaty, not just the registration form.

The company should examine third-party information separately. A reassessment may rely on bank information, customer data, customs records, information exchanged with another country, a parent-company document or statements made by a supplier. Under Article L. 76 B of the LPF, the taxpayer must be told la teneur et de l’origine des renseignements et documents obtenus de tiers when they were used to establish the tax. Before collection, the company may request copies of the documents. The request should identify the third-party material and explain why the company needs it to verify accuracy, context, translation or completeness.

This right is particularly important where the administration reads a foreign bank payment as a taxable receipt, an intercompany invoice as an artificial charge or a customer’s statement as proof that the French company performed additional work. The company should ask whether the information covers the full transaction, whether the date and currency are correct, whether the document was translated accurately and whether the administration has confused the French entity with the foreign parent. If the underlying document cannot be disclosed for a protected reason, the response should still ask for a sufficiently precise summary to permit an effective answer.

Evidence also controls the burden of proof. Article L. 192 of the LPF states that, when a prescribed commission or committee has been seized, the administration bears the burden in a claim regardless of the opinion given, subject to the statutory exceptions. It also provides that the taxpayer may bear the burden where the accounts have serious irregularities and the assessment follows the commission’s opinion. The wording includes l’administration supporte la charge de la preuve en cas de réclamation. The practical lesson is simple: a complete, coherent accounting file makes it harder for the administration to characterise the accounts as unreliable and shifts the discussion back to the precise disputed entries.

Do not correct the ledger merely to make it resemble the administration’s calculation. If a genuine error is discovered, document the correction, its accounting date, the affected tax return and the reason it does not amount to an admission of every proposed adjustment. Keep the original files, correction logs and version history. An English translation can assist the reviewer, but the French original, its author and its date should remain available. Translations should not alter legal terms such as loan, contribution, distribution, agency, service or permanent establishment.

The first observations should then be organised around a schedule. Column one quotes or summarises the administration’s adjustment. Column two identifies the disputed fact. Column three gives the legal rule. Column four refers to the supporting document. Column five gives the corrected tax computation. Column six states the precise relief requested. This format allows a foreign founder, French accountant and lawyer to work from one version and gives the tax officer a direct route to each answer. It also reveals missing evidence before the deadline.

II. Which cross-border arguments and appeal steps protect a company after the proposed adjustment?

A. How do French rules apply to parent charges, transfer pricing and activity in France?

A French subsidiary is not taxable on every amount earned by its foreign parent. The starting question is what profit is attributable to the French entity under French law and any applicable tax treaty. Article 209 of the CGI provides that les bénéfices passibles de l’impôt sur les sociétés are determined under the rules referred to in the code and by taking into account profits made in businesses operated in France and profits allocated to France by an international double-tax treaty. The company should therefore test the proposed adjustment against the legal entity, its functions, assets, risks, contracts and treaty position rather than accept a group-wide calculation.

Parent-company funding must be classified before its tax effect is assessed. A capital contribution is not revenue. A shareholder loan is not automatically capital, and the interest on a loan is not automatically deductible. A recharge may be deductible only to the extent that the French company received a real service, the amount is supported and the charge complies with applicable limitations. The evidence should show who performed the work, when it was performed, how the French company benefited, how the price was calculated and whether the same cost was allocated elsewhere in the group.

Transfer pricing is the administration’s term for pricing transactions between related companies. Article 57 of the CGI addresses profits transferred to foreign dependent or controlled companies. Its wording covers les bénéfices indirectement transférés, including transfers through increased or reduced purchase or sale prices or another method. A response should not merely say that the foreign parent and French subsidiary are in the same group. It should address the method, comparables, functions performed, risks assumed, contractual terms and actual results.

For a service fee, collect work records, deliverables, project emails, meeting notes, personnel time, invoices from the parent and evidence that the French entity used the service. For a royalty, preserve the intellectual-property licence, ownership chain, territory, valuation and exploitation evidence. For interest, preserve the loan agreement, drawdown, repayment schedule, rate comparison, use of funds and withholding analysis. For a cost allocation, keep the allocation key, underlying invoices and proof that the French company received a measurable benefit. If the proposed adjustment combines several categories, ask for an itemised split because the legal and factual answers may differ.

The foreign founder should also test whether the administration is alleging that the business had a French activity or permanent establishment beyond the declared company. The fact that a parent company is incorporated abroad does not decide the question. Nor does a French Kbis prove that all group activity belongs to the French company. Relevant evidence includes where contracts were negotiated and signed, who could bind the foreign company, where people worked, where stock was held, where services were delivered, where strategic decisions were made and which entity bore commercial risk.

The Conseil d’État’s decision of 27 March 2020, no. 421627, illustrates the danger of relying only on formal registration. In that case concerning a Swiss company, the Court considered evidence of une activité occulte en France and examined whether the activity and resulting profits had been recorded and taxed abroad. The official decision of 27 March 2020, no. 421627 is not a rule that every foreign founder with French customers has a hidden activity. It is a warning that the actual operating model must be documented, especially when the company’s French presence, management and revenue do not align with its filings.

The distinction between a French subsidiary, a branch and an undeclared activity should be made explicitly in the observations. A subsidiary has its own legal personality, accounts and tax return. A branch is a French establishment of the foreign company and may have a different accounting and tax profile. An undeclared activity allegation concerns the reality of operations and can affect the limitation period and penalties. The response should state which entity contracted, invoiced, employed people, owned assets and reported revenue for each disputed transaction. A diagram showing the entities and cash flows is often more useful than several pages of general corporate background.

Timing matters because the administration’s right to reassess is not unlimited. Article L. 169 of the LPF, in the version in force from 1 July 2026, states that for income tax and IS the right of reassessment normally runs until la fin de la troisième année qui suit celle au titre de laquelle l’imposition est due. The provision contains exceptions, including a ten-year period for a hidden activity and other specified failures. A foreign founder should calculate the years independently from the notice and ask which limitation rule the administration invokes. A longer period cannot be assumed merely because records are held abroad.

If a foreign tax authority has already taxed the same profit, the company should identify the double-taxation issue without treating it as a substitute for the French procedural response. The applicable treaty may provide a foreign tax credit, an exemption, an allocation rule or a mutual agreement procedure. The company should preserve the foreign assessment, payment proof, tax computation, treaty article and correspondence with the foreign authority. The French observations should explain the potential overlap and request that the French administration use the correct treaty analysis. The company must nevertheless meet the French response deadline.

B. What are the appeal, payment and litigation deadlines?

The initial observations and the later appeal are separate steps. A foreign-owned company should not wait for the final tax notice before responding to the proposal. The thirty-day period under Article L. 57 and Article R*57-1 is the first opportunity to dispute the facts, legal basis, computation and penalties. If the administration maintains all or part of the adjustment in its response to observations, the company should compare that answer with each point originally made and identify any new reasoning. A new ground or a changed amount may require a further procedural response and should be recorded immediately.

A hierarchical appeal may be available while the reassessment procedure is still developing. Article L. 54 C of the LPF states that, outside the procedures excluded by the text, the proposal may be subject to a hierarchical appeal within the time for a contentious claim, and that appeal suspend le cours de ce délai. The company should address the request to the appropriate superior or interlocutor identified in the correspondence and explain the unresolved technical issue, not simply repeat the first letter.

In its decision of 6 July 2026, no. 505004, the Conseil d’État clarified the parallel operation of the two time limits for a contradictory reassessment following a desk review. The taxpayer may make un recours hiérarchique dans les deux mois suivant la notification de la proposition de rectification, but must still send observations within thirty days. When that hierarchical appeal is timely, collection of the corresponding amounts cannot regularly occur before the appeal has ended. The official decision of 6 July 2026, no. 505004 is especially important for a founder who assumed that a request for a meeting extended the initial response period. It does not: protect both deadlines separately.

After the tax is assessed and put into collection, the company normally begins with an administrative claim. The claim should identify the legal entity, tax, period, notice or payment, amount disputed, reasons and documents. The current DGFiP guidance on how to make a claim explains that a claim may be filed through the secure professional mailbox or, where necessary, by paper, and that a representative must have a proper mandate. The claim should request full discharge, partial reduction or restitution with a precise amount. It should not be a copy of the original observations if the administration has since issued a new calculation.

The general claim deadline is set by Article R*196-1 of the LPF. For taxes other than local taxes and related taxes, a claim must generally be filed no later than 31 December of the second year following the year of collection, the notice of collection or the event supporting the claim. The text uses the expression au plus tard le 31 décembre de la deuxième année suivant celle. The deadline must be recalculated for the tax and procedure involved. The official DGFiP deadline guidance confirms that special rules may apply after a tax audit. The company should record both the ordinary claim deadline and any more favourable audit-related deadline in its calendar.

Do not confuse the deadline for the administration to reassess with the deadline for the company to claim a reduction. Article L. 169 concerns the right of reassessment. Article R*196-1 concerns the admissibility of a claim. A proposal may interrupt or affect limitation issues without giving the company an unlimited period to challenge the tax after collection. The notice, response to observations, assessment notice and proof of payment should be kept together so that the correct date can be calculated.

Filing a claim does not automatically suspend payment. The official DGFiP procedure states that a contested tax remains payable unless the company expressly requests a sursis de paiement, a stay of payment, in its claim. The request should state the amount covered and be supported by a realistic payment and security proposal. A company that simply stops paying may expose itself to collection action, late interest and additional costs. A company that pays without reserving its rights may protect cash flow but should preserve the claim and payment records for restitution.

Late interest is separate from the merits of the reassessment. Article 1727 of the CGI provides that an unpaid fiscal debt gives rise to interest; the text says it donne lieu au versement d’un intérêt de retard and sets the rate in the provision. The company should ask the tax service for a line-by-line calculation of principal, interest and penalties. If an amount is withdrawn or reduced, request the corresponding recalculation rather than rely on an informal telephone assurance.

Penalties should be contested separately from the tax base. Article 1729 of the CGI provides, among other sanctions, a 40% increase for a deliberate breach and an 80% increase for abuse of rights or fraudulent manoeuvres. The statutory wording includes 40 % en cas de manquement délibéré. A calculation error, a defensible interpretation, a translation problem or a disagreement about transfer pricing does not automatically establish deliberate conduct. The company should explain its compliance process, advice received, disclosure of the relevant transaction, accounting treatment and efforts to correct any error. It should request withdrawal of the penalty even if a small amount of principal is ultimately accepted.

The administrative claim is followed, if necessary, by litigation before the competent administrative court. The company should not assume that a negotiation, a meeting with the tax officer or a request to the conciliator stops every deadline. The DGFiP page on remedies during a control describes hierarchical review, the interlocutor and other routes, but the company should keep its claim and court calendar independent. The claim file should contain the proposal, observations, response to observations, assessment, proof of receipt, accounting bridge, legal authorities, expert analysis and a chronology.

For an English-speaking founder, a practical response timetable is:

• Within 48 hours: secure the notice, confirm receipt, appoint the response team, preserve the FEC and request missing documents.
• During the first week: reconcile each adjustment, classify the cross-border transactions, identify any third-party evidence and calculate the extension request if needed.
• Before the thirty-day deadline: send signed observations with a precise schedule, supporting documents and express objections to interest and penalties.
• After the administration’s response: compare the maintained adjustments, consider the hierarchical appeal, and check the separate two-month deadline where Article L. 54 C and the relevant procedure apply.
• At collection: decide whether to pay, request a stay of payment, or offer security; preserve the claim deadline and do not let negotiations replace a formal filing.

This timetable is not a substitute for calculating the dates from the actual documents. It is a way to ensure that a company abroad does not lose the first procedural protection while it is still searching for a translated bank statement. The strongest response combines a valid procedural objection with a corrected computation and evidence that explains how the French entity operated. It also tells the administration what decision the company requests for every line of the reassessment.

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Conclusion

A French corporate tax reassessment should be handled as a timed legal procedure, not as an accounting disagreement to be settled after the next board meeting. The company must protect the thirty-day observation period, test the notice and calculation, preserve the FEC, demand usable third-party evidence, and separate the tax base from interest and penalties. A foreign parent’s payments, contracts and personnel records should be mapped to the French entity and to the applicable treaty. The company should also calculate the reassessment and claim deadlines independently and decide expressly whether a stay of payment is required. Recent Conseil d’État decisions reinforce the importance of the stated financial consequences and the parallel operation of observation and hierarchical-appeal deadlines. A clear schedule, verified official sources and a complete evidence file give the foreign founder the best basis for reducing or cancelling an unjustified adjustment while preserving the company’s ability to litigate.