IFRS 16 (EU-endorsed)

IFRS 16 Lease Calculator
France

IFRS 16 lease calculator with France-specific regulatory context, Autorité des Marchés Financiers (AMF) / Haut Conseil du Commissariat aux Comptes (H3C) expectations, and local inspection findings.

Lease Terms

If checked, ROU asset depreciates over useful life instead of lease term (IFRS 16.32)

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IFRS 16.26 — At the commencement date, a lessee shall measure the lease liability at the present value of the lease payments that are not paid at that date.

IFRS 16.23–24 — At the commencement date, a lessee shall measure the right-of-use asset at cost.

ISA 500 — Sufficient appropriate audit evidence for the lease liability as independent audit evidence.

ISA 540 — Auditing accounting estimates — applies to the IBR determination and lease term judgment.

IFRS 16 in France — IFRS 16 (EU-endorsed)

France adopted IFRS 16 through EU endorsement for listed companies and their consolidated groups. French entities reporting under Plan Comptable Général (PCG) — the French national accounting standard — do not apply IFRS 16; instead, they follow national rules where operating and finance lease distinctions remain. The Autorité des Marchés Financiers (AMF) supervises financial reporting by listed entities, while the Haut Conseil du Commissariat aux Comptes (H3C) oversees audit quality. The Autorité des Normes Comptables (ANC) is responsible for national accounting standards and participates in IASB discussions.

Regulatory Context — Autorité des Marchés Financiers (AMF) / Haut Conseil du Commissariat aux Comptes (H3C)

The AMF has included IFRS 16 in its annual thematic review priorities since the standard's effective date. Key AMF observations include: need for improved disclosure of key assumptions (particularly the IBR), insufficient explanation of the impact on alternative performance measures (APMs), and the need for clear reconciliation between IFRS 16 lease liabilities and off-balance-sheet commitments. The H3C's inspection findings for statutory auditors (commissaires aux comptes) have highlighted insufficient challenge of management's lease term assessments and IBR determinations.

Practical Guidance for France

For French entities, the IBR should reference French and Eurozone market conditions — OAT (Obligations Assimilables du Trésor) yields for the risk-free component, plus entity-specific credit spreads. French commercial lease law (bail commercial, Code de Commerce Articles L145-1 et seq.) provides significant tenant protections including the right to renewal (droit au renouvellement) for commercial leases of at least 9 years and the right to an eviction indemnity (indemnité d'éviction) if renewal is refused. These statutory protections may make lease extensions reasonably certain under IFRS 16, extending the accounting lease term beyond the initial contractual period.

Audit Expectations

French statutory auditors (commissaires aux comptes) follow ISA as adopted in the EU, supplemented by French professional standards issued by the H3C and the CNCC (Compagnie Nationale des Commissaires aux Comptes). The H3C's inspection programme has focused on the audit of IFRS 16 estimates, with findings including: failure to independently verify the IBR, inadequate testing of lease completeness, and insufficient documentation of the auditor's assessment of extension option judgments.

France-Specific Considerations

The French 3-6-9 commercial lease structure (bail 3-6-9) — where the standard commercial lease runs for 9 years with the tenant having the right to terminate at 3-year intervals — creates specific IFRS 16 lease term considerations. The default lease term is 9 years, but the tenant's right to break at years 3 and 6 requires assessment of whether the tenant is reasonably certain NOT to exercise these break options. Factors include the entity's investment in the premises, the strategic importance of the location, and historical break option exercise patterns.

Common Inspection Findings

IBR not independently tested — auditors accepted management's rate without market data verification

Bail commercial 3-6-9 structure not analysed for break clause exercise likelihood

Embedded leases in facility management and fleet contracts not identified

AMF APM guidelines not fully addressed in disclosure review

Lease modification accounting for COVID-era rent reductions not consistently applied

Frequently Asked Questions — France

Does IFRS 16 apply to French entities reporting under PCG?
No. The Plan Comptable Général does not incorporate IFRS 16. French entities reporting under PCG continue to classify leases as operating (crédit-bail) or financial (location financement) following national rules. IFRS 16 applies only to French entities preparing IFRS consolidated financial statements — primarily listed companies (sociétés cotées).
How does the French 3-6-9 bail commercial affect IFRS 16?
The standard 9-year commercial lease with break options at years 3 and 6 requires assessment of break exercise likelihood. If the entity has significant leasehold improvements, strategic location needs, or historical evidence of not exercising breaks, the lease term may extend to 9 years. If breaks are routinely exercised, the lease term may be only 3 years. Document the assessment individually for material leases.
What does the AMF expect for IFRS 16 alternative performance measures?
The AMF expects entities to clearly explain the IFRS 16 impact on APMs such as EBITDA, operating cash flow, and net debt. If the entity presents APMs excluding IFRS 16, the AMF requires reconciliation to IFRS figures, consistent calculation methodology, and prominent labelling to avoid misleading users. The ESMA Guidelines on APMs apply.
How does the indemnité d'éviction affect lease term assessment?
Under French law, a landlord refusing to renew a commercial lease must pay an eviction indemnity (indemnité d'éviction), often equivalent to the value of the business. This significant financial consequence creates an economic disincentive for the landlord to refuse renewal, which may support the lessee's assessment that extension is reasonably certain. Consider this economic dynamic when assessing IFRS 16 lease terms.
What H3C findings should auditors be aware of?
H3C inspections have highlighted: insufficient challenge of IBR assumptions, failure to assess embedded leases in service contracts, inadequate documentation of lease term judgments for material properties, reliance on management representations without independent verification, and insufficient consideration of French lease law protections in the lease term assessment.

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