Accounting Principles in 2026: French GAAP, IFRS and FEC — Complete Guide

Updated 12 May 2026. Nine principles structure the entire French accounting framework, codified in the Plan Comptable Général (PCG, ANC regulation 2014-03 as amended) and anchored in Articles L123-12 to L123-28 of the French Commercial Code. ANC regulation 2025-04, which entered into force on 1 January 2026, has substantially evolved this framework — integration of sustainability data in the notes, redesign of the income statement, modernised goodwill treatment. For an SME director, a junior CFO, an in-house accountant or a DCG/DSCG student, mastering these foundations is not an academic exercise: it is what allows accounts to be enforceable, defensible in a tax audit and readable by a banker or an investor. Cabinet Hayot Expertise offers a Paris-based overview of the normative framework, the principles, the chart of accounts, the material obligations and the trade-offs to be made in 2026.

The PCG (ANC regulation 2014-03) and the ANC 2025-04 update#

The Plan Comptable Général is the reference framework for the statutory (individual) accounts of French companies. It is carried by Autorité des Normes Comptables (ANC) regulation No. 2014-03 of 5 June 2014, approved by ministerial order and regularly amended. The most significant overhaul, ANC regulation 2025-04, entered into force for financial years opened on or after 1 January 2026. It introduces three families of changes: gradual integration of ESRS data in the notes (link to the CSRD), the option to present the income statement by function in addition to the by-nature format, and modernised goodwill treatment with an impairment test available to certain entities instead of systematic amortisation. The 2026 closing deliverable is therefore no longer identical to that of 2025: notes must be recomposed and methodological options explicitly disclosed.

When IFRS apply — consolidated accounts of EU-listed companies#

IFRS (International Financial Reporting Standards), issued by the IFRS Foundation, are mandatory for the consolidated accounts of European companies listed on a regulated market, under EU regulation 1606/2002. An unlisted French SME with no material international subsidiary remains exclusively under the PCG. By contrast, an Euronext-listed mid-cap, a listed REIT or the French subsidiary of a US-listed group must produce consolidated accounts in IFRS — while keeping its statutory accounts in PCG. US GAAP have no direct application in France; they appear in group reporting reconciliations where a French subsidiary belongs to an SEC-registered group.

Role of the ANC and articulation with the Commercial Code#

The ANC is the independent French public authority that issues, through homologated regulations, the rules applicable to the annual and consolidated accounts of private legal entities. It articulates its action with two higher levels of standards: the Commercial Code (Articles L123-12 to L123-28) which lays down the legal obligations to keep accounts, and European law (Accounting Directive 2013/34/EU, IFRS regulation). A Paris-based director must therefore read the accounts through three lenses — the Commercial Code for obligations, ANC regulation 2014-03 / 2025-04 for methods, and the BOFiP tax doctrine (BOI-BIC-DECLA-30) for tax restatements.

Going concern, consistency of methods, independence of exercises#

The going concern principle (Article 121-1 PCG, Article L123-20 Commercial Code) requires accounts to be prepared on the assumption that the entity continues its activity. Otherwise — insolvency, cessation, liquidation — assets are valued at liquidation value, which radically alters the balance sheet. The consistency principle (Article 121-4 PCG, L123-17) requires the same valuation and presentation rules from one exercise to the next; any change must be justified and disclosed in the notes. The independence of exercises (Article 313-1 PCG) — often called cut-off — requires income and expenses to be attached to the exercise they relate to, through prepaid expenses, accrued income, invoices not yet received and accrued expenses. This is the mechanism that separates a rigorous accountant from a sloppy one.

Historical cost, prudence, true and fair view#

Historical cost (Article 214-1 PCG), also called monetary nominalism, requires assets to be recorded at acquisition or production cost, not at market value. Exception: trading financial instruments and certain hedging transactions. The prudence principle (Article 121-3 PCG, L123-20) requires the recognition of probable losses as soon as they are known, but forbids the recognition of unrealised gains until they are realised. In practice: a probable inventory write-down is booked immediately, an unrealised capital gain on a fixed asset is never booked. The true and fair view (Article L123-14) is the overriding objective: accounts must give a true and fair view of the entity's assets, financial position and result. When a technical rule leads to a misleading presentation, the true and fair view prevails — with disclosure in the notes.

Non-offsetting, intangibility, materiality#

The non-offsetting principle (Article L123-19) requires assets and liabilities, income and expenses, to be measured separately. A late customer and a supplier to be paid do not net out. The intangibility of the opening balance sheet (Article L123-19 paragraph 4) guarantees that the opening balance sheet of an exercise corresponds strictly to the closing balance sheet of the previous one: no retroactive entry may modify a closed exercise. Materiality is a transversal concept of the PCG and ANC doctrine: only significant information, capable of influencing the decision of the user of the accounts, must be disclosed in detail. A usual materiality threshold sits between 1% and 5% of total balance sheet or turnover depending on context.

The 8 classes of accounts and their logic#

The French chart of accounts organises entries into 8 classes: class 1 equity (share capital, reserves, result, provisions, borrowings); class 2 fixed assets (intangible 20, tangible 21, financial 26-27, amortisation 28, impairment 29); class 3 inventories and work in progress; class 4 third parties (customers 41, suppliers 40, State 44, employees 42, shareholder current accounts 45); class 5 financial accounts (bank 512, cash 53, marketable securities 50); class 6 expenses; class 7 income; class 8 special accounts (off-balance-sheet commitments, pending result). Each account is subdivided into sub-accounts according to the root — a baseline rule for the readability of an outsourced accounting engagement.

Balance sheet accounts vs P&L accounts#

Classes 1 to 5 feed the balance sheet (patrimonial position at closing). Classes 6 and 7 feed the income statement (flows of the exercise) and are closed each year. Class 8 is used for off-balance-sheet commitments and pending transactions. This dichotomy allows a mechanical roll-up: the result of the exercise (difference 7 – 6) feeds account 12 on the balance sheet, which is then allocated by the AGM into reserves, retained earnings or dividends.

Sectoral customisation#

The PCG admits professional charts of accounts adapted to specific activities: associations (ANC regulation 2018-06), co-ownerships, real estate investment companies, regulated professions, agricultural companies, etc. A corporate-taxed SCI follows the general PCG; an income-taxed SCI keeps a simplified accounting. The principle is to retain the PCG backbone (classes and main accounts) while allowing sectoral subdivisions. For a specific activity, the right reflex is to check the applicable sectoral ANC regulation.

Daily journal, general ledger, inventory book#

Article L123-12 of the Commercial Code requires regular and sincere bookkeeping. This obligation translates materially into three books. The daily journal records chronologically, transaction by transaction, all movements affecting the patrimony. The general ledger reorganises these entries by chart-of-accounts code. The inventory book historically summarised assets and liabilities at closing (the formal obligation was removed in 2016, but the content remains required as an annual inventory). These books must be kept without blanks or alterations, and the entries must be supported by dated and probative supporting documents.

10-year retention and accepted formats#

Article L123-22 requires the retention of accounting documents for 10 years from the closing of the exercise. The original paper form is no longer required: dematerialisation is authorised provided that authenticity, integrity and legibility are guaranteed (decree of 22 March 2017). Accepted formats include PDF/A, structured XML, and exports from accounting software, subject to time-stamping and probative electronic signature. Cloud-based accounting must give access to the data in case of audit, in a format usable by the tax administration.

FEC and tax audit obligations#

The FEC (Fichier des Écritures Comptables) is codified in Article L47 A of the Tax Procedure Code and specified in Article A47 A-1 LPF. Any entity keeping its accounts in computerised form must be able to produce, at the very start of a tax audit, an FEC in normalised format: UTF-8 text file, 18 defined columns (journal, date, account, label, debit, credit, lettering, etc.), strict chronological order. Since the 2017 amending finance law on VAT fraud, accounting software must be certified compliant by its publisher (attestation or certificate). The most widely used 2026 software — Pennylane, Cegid Quadra/Loop, Sage Compta, EBP, Inqom, Indy — produces a compliant FEC natively. For a full deep-dive, see our article dedicated to the FEC tax audit file.

Basic, simplified and super-simplified system#

Article L123-25 and following of the Commercial Code open three regimes by size. The basic system applies by default: full annual accounts (balance sheet, income statement, developed notes). The simplified system (entities not exceeding 2 of the 3 thresholds: €6M balance sheet, €12M turnover, 50 employees — 2024-2026 thresholds to be confirmed in the updated decree) allows abridged notes and certain valuation simplifications. The super-simplified system (BIC or BNC below 2 of 3 thresholds: €350K balance sheet, €700K turnover, 10 employees) notably allows cash-basis accounting during the year, with accrual reconciliation at closing.

Micro-entrepreneur regime and cash accounting#

The micro-entrepreneur regime (micro-BIC, micro-BNC) is based on a lump-sum allowance for professional expenses and exempts the micro-entrepreneur from commercial bookkeeping. Only a chronological receipts book is required, supplemented for resale activities by a purchase register. This simplification has a downside: no ability to deduct actual expenses, and a capped turnover threshold (€188,700 for sale of goods, €77,700 for services in 2026, to be verified annually). Beyond, automatic switch to simplified real regime.

2026 thresholds for each regime#

Thresholds are periodically re-evaluated by decree to track inflation. The 2026 values are to be confirmed in the implementing decree of the revised EU accounting directive. Recommended practice: check each year at closing the thresholds crossed over the last two exercises, as a durable crossing shifts the entity to the higher regime — with direct impact on the notes, publication obligations and possible obligation to appoint a statutory auditor.

Historical cost versus fair value#

The PCG privileges historical cost: assets sit on the balance sheet at acquisition cost, less amortisation and impairment. IFRS broadly accept fair value (mark-to-market) for financial instruments, investment property (IAS 40), certain biological assets. Consequence: the same building can appear at €2M on the PCG balance sheet (historical cost – amortisation) and at €4.5M on the IFRS balance sheet (fair value). The IFRS result then incorporates fair value movements, making it more volatile than the PCG result.

Goodwill, leasing, retirement provisions#

Three emblematic divergences. Goodwill: PCG amortisation over useful life (10 years by default in the absence of a justified longer duration), annual IFRS impairment test without amortisation (IAS 36). Leasing: PCG records rent as a class 6 expense; IFRS 16 books a right-of-use asset and a lease liability on the balance sheet. Retirement provisions (IFC commitment): often off-balance-sheet in PCG (ANC option), mandatorily provisioned in IFRS (IAS 19). These three subjects are the main reconciliation items when moving from French statutory accounts to a group's consolidated IFRS accounts.

Presentation by nature versus by function#

The PCG historically requires an income statement presentation by nature (purchases, external services, personnel expenses, depreciation). The ANC 2025-04 regulation now opens the possibility of a presentation by function (cost of sales, selling expenses, administrative expenses, R&D expenses), subject to consistency across exercises and to a reconciliation in the notes. This option, inherited from IAS 1, brings the French income statement closer to Anglo-Saxon practices and facilitates reading by international investors.

Integration of ESRS data in the notes#

ANC regulation 2025-04 initiates the integration into the notes of extra-financial data stemming from the ESRS (European Sustainability Reporting Standards), in line with the CSRD. Large companies subject to the CSRD must now articulate their sustainability report with the figures in the accounting notes: GHG emissions, energy intensity, social indicators. SMEs are not directly subject to the CSRD but may be required by their large clients to provide data (value-chain ripple effect).

Income statement redesign and goodwill treatment#

In addition to the by-function presentation mentioned above, ANC regulation 2025-04 modernises the goodwill treatment by allowing certain entities (notably those producing consolidated accounts) an annual impairment test instead of systematic amortisation. Deferred charges also see their treatment clarified, with stricter rules to limit profit-smoothing practices.

E-invoicing schedule 2026-2027#

The e-invoicing calendar is now confirmed: mandatory reception for all companies on 1 September 2026, mandatory issuance on 1 September 2026 for large companies and mid-caps, and 1 September 2027 for SMEs and micro-entrepreneurs. Flows pass through a PDP (Partner Dematerialisation Platform) or the PPF (Public Invoicing Portal). The accounting impact is major: possible automation of supplier data entry, but even stricter traceability of entries and reinforced mandatory invoice mentions. Our SME guide to e-invoicing 2026 details the operational implementation.

The trade-off — internalise or outsource accounting#

In the files we handle in Paris, three scenarios coexist. A micro-entity or VSB (turnover < €500K): full outsourcing, shared software (Pennylane, Indy), automated entry and annual closing by the firm. An SME at €2M to €15M: hybrid model — in-house bookkeeper, supervision and review by the firm, monthly FEC production. A mid-cap or group: internal CFO or outsourced CFO, structured accounting team, firm engaged on review or statutory audit. The decisive criterion is not raw size but operational complexity (multi-site, multi-country, multi-framework, ongoing fundraising).

The underestimated risk — non-compliant FEC and uncertified software#