Your group is headquartered in Stockholm, London, New York or Singapore, and your French subsidiary ends most months with idle cash on its current account while another company of the group borrows expensively elsewhere. Your bank proposes to sweep the French balances every evening into a master account, a technique called zero balancing, or to offset the balances only on paper, which practitioners call notional pooling. Your tax adviser warns that France reserves lending to banks and that moving money between group companies can be reclassified, and your French auditor asks for a written treasury agreement, a convention de trésorerie, before certifying the accounts. This article explains how a foreign group can lawfully centralise the cash of its French subsidiary, what the agreement must contain, how interest is priced and taxed, and how to recover pooled funds, including after the French company enters insolvency proceedings, drawing on two 2025 court rulings that every foreign parent should know.

French readers meet these techniques under several names that need a brief translation key before going further. Cash pooling means the centralised management of group cash, whether by physical daily transfers or by a purely accounting set-off. The centralising company, often the foreign parent or a dedicated finance vehicle, is called the centralisateur or cash pool owner. The French rules live mostly in the Monetary and Financial Code for the banking monopoly, in the Commercial Code for company approvals and insolvency, and in the General Tax Code for interest. The Kbis is the French company’s registration certificate issued by the greffe, the clerk’s office of the commercial court; the BODACC is the official gazette publishing insolvency openings; URSSAF is the agency collecting social charges and plays no direct role here but appears whenever the group also moves people. This guide is written for the foreign decision-maker: the parent company’s finance director, the group treasurer and the non-resident shareholder who must sign, fund and if needed litigate from abroad.

I. Pooling cash with your French subsidiary: how the treasury agreement works and what makes it valid

French law starts from a prohibition and immediately grants groups a tailored exemption. The prohibition is the banking monopoly: article L. 511-5 of the Monetary and Financial Code states that no person other than a credit institution or a financing company may carry out credit transactions on a habitual basis. Without an exemption, repeated cash transfers between companies for consideration could look uncomfortably like a banking business. The exemption is article L. 511-7 of the same code, which provides that the prohibitions defined in article L. 511-5 do not prevent an enterprise, whatever its nature, from carrying out treasury operations with companies having with it, directly or indirectly, capital links conferring on one of the related enterprises effective control over the others. In the Cour de cassation’s own restatement, handed down in March 2025 and discussed in Part II, under article L. 511-7 of the Monetary and Financial Code, an enterprise may carry out treasury operations with companies having with it, directly or indirectly, capital links conferring on one of the related enterprises effective control over the others. Three practical conditions follow for a foreign group. First, there must be genuine capital links giving effective control: a wholly or majority-owned French SAS or SARL qualifies naturally, while a 50-50 joint venture or a minority stake needs a closer look before it joins the pool. Second, the operations must be treasury operations, meaning short-term cash management, not the permanent financing of the subsidiary’s business, which belongs to capital increases or structured shareholder loans. Third, the arrangement must be documented as what it is: a bank-style flow without a contract is exactly what the monopoly prohibition targets.

A. The written agreement, the pooling mechanics and the approvals your French subsidiary needs

Put the pool in a signed treasury agreement before the first sweep, ideally with an English version for the group and a French version that governs, since the French subsidiary’s auditor, tax inspector and insolvency judge will read the French text. The agreement should name the centraliser and each participant, describe the mechanics chosen, and fix the financial terms. In physical pooling, or zero balancing, each participant’s account is swept daily to or from the master account, so the French subsidiary’s balance returns to zero or to an agreed target every evening. In notional pooling, no money moves: the bank calculates interest on the netted position, which avoids transfers but requires a bank willing to offer the product in France and a clear contractual allocation of the interest benefit. Either way, the agreement must state the interest rate on debit and credit positions, the value dating, the fees of the centraliser, the duration and the termination clause with its notice period, and what happens on exit: immediate repayment of the net position, or a staggered schedule. A 2025 Versailles case shows why this clause matters: a Swedish parent and its French subsidiary had completed their 2020 treasury convention with two current account agreements under which the subsidiary could repay the pooled advances over five years at 3 percent interest, and those repayment terms later decided how the parent’s claim was treated in the subsidiary’s insolvency. The lesson is to draft the exit when relations are good, because the clause will be read for the first time when relations are not.

On the French subsidiary’s side, the agreement needs corporate approvals, and foreign parents often discover this requirement from the auditor rather than from counsel. Where the French company is an SAS, the simplified joint-stock company most foreign groups choose, advances involving a shareholder holding more than ten percent of voting rights, or the president or a director, fall under the regulated-agreements procedure of article L. 227-10 of the Commercial Code: the statutory auditor, or if none has been appointed, the president of the company, presents to the shareholders a report on the agreements entered into directly or through an intermediary between the company and its president, one of its directors, one of its shareholders holding more than ten percent of the voting rights, and the shareholders vote on that report. A treasury agreement with the foreign parent, which typically holds all or most of the votes, squarely falls in this procedure, and the vote should be taken on the agreement itself, then each year on its continuation if the auditor so requires. In a single-shareholder SASU, record the agreement in the register of decisions. Mirror the discipline for the interest rate: French civil law permits interest freely, since article 1905 of the Civil Code provides that it is permitted to stipulate interest for a simple loan, whether of money, of foodstuffs or of other movable things, but a zero rate between companies needs a justification in the file, because an interest-free advance by a company lender can be challenged as an abnormal act of management. The administration’s business portal confirms the distinction for shareholder advances generally: interest is optional for an individual lender, while a legal entity lending free of charge risks reclassification. Finally, align the pool with the company’s Form: the deductibility of interest, examined next, requires fully paid-up capital, and the pool works best once the Kbis, the bank mandates and the signatory powers are settled, points covered in our guides on choosing between an SAS, a SARL, a branch and a subsidiary in France and on opening a French business bank account and releasing the capital deposit from abroad.

B. Pricing the flows and surviving the tax audit: the deductible cap, the arm’s length rate and the abnormal-act risk

Interest on pooled balances is where French tax law bites, and the mechanics resemble those of shareholder current accounts with one decisive difference: both sides of the flow are companies, so the administration examines both the deduction at the French subsidiary level and the abnormal advantage at whichever level lends too cheaply. The first ceiling is the same reference rate that caps shareholder advances. Article 39 of the General Tax Code allows deduction of interest paid to shareholders on sums they leave or make available to the company, in addition to their share of the capital, whatever the form of the company, within the limit of interest calculated at a rate equal to the annual average of the average effective rates charged by credit institutions and financing companies for variable-rate loans to businesses with an initial duration of more than two years. The administration publishes the resulting reference rate per closing period: for financial years closed between 31 December 2025 and 30 January 2026 it stood at 4.55 percent, and for those closed between 31 March and 29 April 2026 at 4.39 percent, against fixings above 5 percent for summer 2025 closings. Pool interest charged above the rate of the French subsidiary’s closing period remains contractually owed but is partly non-deductible, so the treasury agreement should either track the reference rate by formula or be reviewed before each closing. The same article adds a trap for recently formed subsidiaries: this deduction is subject to the condition that the capital has been fully paid up. A French SAS incorporated with 10,000 euros of subscribed capital of which only a fraction was paid in cannot deduct pool interest until the balance is actually paid, a detail worth fixing before the pool starts rather than during the audit.

The second ceiling is specific to related companies and almost always applies to a pool, since the participants are by definition linked. Article 212 of the General Tax Code provides that interest on sums left or made available to an enterprise by an enterprise that is its shareholder, or by an enterprise directly or indirectly related, is deductible within the limit of interest calculated at the rate set by article 39 or, if higher, at the rate the borrowing enterprise could have obtained from independent financial institutions under similar conditions. The escape is an arm’s length file: bank term sheets, the group’s external borrowing rate adjusted for the subsidiary’s own risk, or a documented transfer-pricing study collected when the pool rate was set. Groups that also bill the French subsidiary for management services should prepare both files together, because inspectors audit interest and fees as one package, as explained in our analysis of transfer pricing on management fees charged to the French company. On the lender’s side, the French starting point is that pool interest is investment income: article 124 of the General Tax Code treats as income interest, arrears, redemption premiums and all other proceeds from current accounts. Where the centraliser sits abroad, the applicable double tax treaty allocates taxing rights over that interest and usually limits French withholding, but treaty outcomes turn on the lender’s residence, status and the precise wording of the interest article, so the treaty position should be validated before the first interest payment and the corresponding French return are filed. Two further cautions complete the picture. First, an interest-free or manifestly under-priced upward flow, from the French subsidiary to the foreign parent, is the textbook pattern of an abnormal act of management, added back to the subsidiary’s taxable profit with penalties, and the file should show what the subsidiary receives in return: security of funding, lower group borrowing costs, or a quantified benefit, not a bare assertion of group solidarity. Second, fees charged by the centraliser for running the pool raise their own questions, including whether they remunerate a genuine service and how they are treated for VAT, which the agreement should describe service by service rather than as a single opaque margin. The tax administration’s detailed doctrine on interest deductibility, reference BOI-BIC-CHG-50-50-30 on the BOFiP official tax database, and the administration’s English-language presentation of current account mechanics on service-public.fr for businesses, are the two official starting points to give your adviser alongside this article.

II. Getting the pooled cash back and defending it when things go wrong

A treasury agreement is tested in exactly three situations: the French subsidiary will not or cannot repay the net pooled position on demand, the tax administration reclassifies the flows, or the subsidiary enters safeguard, administration or liquidation proceedings and the parent must declare its claim from abroad. The 2025 case law speaks directly to the first and third situations, and its message is balanced: documented pool claims are real claims that courts admit, but the agreement does not transfer third-party debts and does not survive on its own without proof of the underlying movements.

A. Repayment, set-off and insolvency: what the March 2025 Cour de cassation and the Versailles ruling mean for a foreign parent

Start with the Cour de cassation’s commercial chamber judgment of 12 March 2025, appeal 23-23.961, published at Cour de cassation, commercial chamber, 12 March 2025, no. 23-23.961. A parent company and its subsidiary had signed a centralised treasury agreement in April 2018. The parent was ordered to pay sums to one of its shareholders on a current account, and its director, who also directed the subsidiary, had the subsidiary pay that debt by cheques issued under the treasury agreement. Both companies later entered liquidation, and the shareholder declared his claim, originally against the parent, in the subsidiary’s proceedings by invoking the treasury agreement. The Court approved the rejection of that claim. After recalling the L. 511-7 principle quoted in Part I, it endorsed the appeal court’s finding that the agreement stated the parties remained independent and continued to manage their own obligations autonomously, so that the existence of such a treasury agreement cannot constitute the legal basis for transferring a payment obligation between the two companies toward the claimant. Having further found that no other evidence proved any transfer of the payment obligation from the original debtor to the subsidiary, the Court concluded the rejection was exact and dismissed the appeal. For a foreign group, the consequences are concrete. A treasury agreement organises cash movements between its signatories; it does not make the French subsidiary the guarantor of the parent’s debts to third parties, and it does not allow a third party to collect from the subsidiary what the parent owes. If the group wants the subsidiary to secure a parent debt, that requires a separate guarantee, with its own corporate approvals and its own interest analysis, not a payment instruction dressed as pooling. Conversely, the judgment confirms by implication what properly documented pool balances are: reciprocal claims between the participants for the net positions shown by the pool records, which is exactly how a parent should present its claim if the subsidiary fails.

The second ruling shows the mirror image, a foreign parent collecting from its failed French subsidiary, working as it should. In a judgment of 13 May 2025, RG 24/06303, published at Paris Court of Appeal, Versailles, 13 May 2025, RG 24/06303, a Swedish parent company, Duroc, had funded its French subsidiary Griffine through a 2020 treasury convention later completed by two 2022 current account agreements. The court held that the pooled funds necessarily recorded in the subsidiary’s books as shareholder current account advances constitute claims of the parent, so that the company Duroc was entitled to demand payment at any time of these funds made available to its subsidiary. The 2022 agreements gave the subsidiary the option to repay over five years at 3 percent, since each provided for the subsidiary to repay its sole shareholder the current account advances in instalments over a five-year period, with interest at 3 percent. Taken together, the conventions were loans of one year or more within the meaning of article L. 622-28 of the Commercial Code, which provides that the opening judgment stops the running of contractual and legal interest, unless the interest results from loan contracts concluded for a duration of one year or more or from contracts with deferred payment of one year or more. Post-opening interest was therefore owed, and the court admits this claim to the collective proceedings, for 1,191,875 euros on a preferential basis and 551,567 euros unsecured. Four operational lessons follow. Draft pool advances as interest-bearing positions with a real maturity or a real schedule, because that drafting preserves post-opening interest under L. 622-28. Keep the pool statements, the ledger postings and the bank sweeps reconcilable euro by euro, since the admitted claim rested on recorded balances, not on narrative. Declare the claim to the creditors’ representative within the deadline running from the BODACC publication, with the agreement, the statements and a computation in euros, because an undeclared claim may be extinguished however well documented. And avoid late reshuffling: article L. 632-1 of the Commercial Code voids payments made after the cessation of payments, including any payment, whatever its method, for debts not yet due on the day of payment and any payment for debts already due, made otherwise than in cash, commercial paper, transfers or any other method of payment commonly accepted in business relations, so a precipitated withdrawal of the pooled balance or an unusual set-off on the eve of proceedings can be clawed back. Parents sensing difficulty should read our guide on closing, dissolving and liquidating a French company from abroad before moving a euro.

B. Demanding repayment, challenging a reassessment and litigating from abroad: evidence, procedure and enforcement

Where the subsidiary is solvent but will not pay, proceed in the order that preserves both the claim and the relationship. First, reconcile: ask the subsidiary’s accountant for the pool statement, the general ledger extract and the bank records for the disputed period, and identify precisely which net position, for which value dates and at which rate, you are claiming. Most pool disputes between related companies are reconciliation disputes, a missing sweep, a misallocated fee, a rate applied to the wrong period, and they settle once both sides work from the same statement. Second, send a formal written demand referring to the agreement’s repayment clause, quantifying principal, interest and value dates, and setting a deadline with payment details for the return wire. A demand made by phone or video call from headquarters leaves no date from which late interest runs and no proof if the dispute hardens. Third, if the agreement contains a set-off clause, a compensation mechanism netting reciprocal positions, invoke it expressly in writing and keep the resulting net statement, because courts give effect to contractual set-off but will not reconstruct it for you. Where the debt is undisputed, due and documented, the French order-for-payment procedure, the injonction de payer, or its European equivalent, offers a fast route that our guide to recovering unpaid amounts through the injonction de payer from abroad describes in detail, and the same logic applies when the creditor is the foreign parent rather than a supplier. Where the subsidiary disputes the balance, the rate or the very existence of the pool, expect proceedings on the merits before the commercial court, where the agreement, the complete sweep history and the approved accounts will carry more weight than any witness statement from headquarters.

Where the dispute is with the tax administration rather than the subsidiary, the defence is built years before the audit, in the file described in Part I: the signed agreement with its rate formula, the arm’s length evidence collected when the rate was set, the regulated-agreements report, the ledger postings and the treaty analysis for cross-border interest. Answer a reassessment proposal point by point and within the deadline, because French tax procedure rewards the taxpayer who engages precisely and punishes silence, and keep the full yearly compliance cycle in order, from approving the accounts to filing them with the greffe, following our annual legal calendar for French companies run from abroad. Three cross-border practicalities apply to every procedure. Limitation periods run regardless of where the creditor lives, so do not let the claim age during informal negotiation; a demand letter interrupts limitation only where the law says so, and an expired claim cannot be revived by a fresh email. Foreign-language evidence, the group’s English treasury policy, foreign bank statements, emails from the treasurer, should be translated by a sworn translator, a traducteur assermenté, before filing, and foreign-currency positions must be converted into euros with the rate and date stated, since French judges order payment in euros on euro-quantified claims. Finally, enforcement of a French judgment against the subsidiary’s French assets and bank accounts runs through a commissaire de justice, the enforcement officer formerly called huissier, without any need for the parent’s team to relocate, while enforcement outside France follows European or treaty channels. None of this requires a presence in France; all of it requires a complete file, which returns to the discipline of Part I: the agreement, the statements, the approvals and the accounts, consistent with each other and dated when the money moved.

Conclusion

Centralising the cash of a French subsidiary is lawful, efficient and common, but it is a legal construction, not a banking habit. The L. 511-7 exemption opens the door only to documented treasury operations between companies under effective common control; the treasury agreement, with its mechanics, rate, duration and exit clause, is what walks through it. Price interest against the fiscal reference rate for the subsidiary’s closing period, pay up the capital in full, keep arm’s length evidence from day one, and put the parent-subsidiary agreement through the regulated-agreements vote. When recovering funds, remember the two 2025 rulings together: the Cour de cassation refuses to turn a pooling agreement into a guarantee of the parent’s debts to outsiders, while the Versailles court admits a well-recorded parent’s pool claim, with post-opening interest, to the subsidiary’s proceedings. Between those poles, everything is paperwork: reconciled statements, written demands, timely declarations and translated evidence. A foreign group that runs its French pool with that discipline gets what pooling promises, cash where the group needs it, interest the administration accepts, and claims that courts admit. A group that sweeps first and documents later discovers the French version of an old treasury truth: in a dispute, only the recorded balance exists.