FRANCE Law and Practice Contributed by: Alexis Popov, Martin Serre and Stéphane Duchesne, &Co Advisory
&Co Advisory 128 rue la Boétie 75008 Paris France Email: alexis.popov@andcoadvisory.com Web: www.andcoadvisory.com
1. Rules Governing Transfer Pricing 1.1 Statutes and Regulations Legal Basis Transfer pricing in France is governed by Article 57 of the French Tax Code (CGI, Code général des impôts ). This provision allows the French Tax Authorities (FTA) to reintegrate into the taxable income of a French entity any profits that have been directly or indirectly transferred to foreign related parties through non- arm’s length conditions. Article 57 of the CGI applies where a French enter - prise: • controls a foreign enterprise; • is controlled by a foreign enterprise; or • is under common control with a foreign enterprise (see 2.1 Application of Transfer Pricing Rules for the definition of “control”). This provision targets all forms of profit shifting, including those arising from pricing policies, financial arrangements, or contractual terms. The transfer pricing regime is supplemented by spe - cific provisions of the French Tax Procedures Code (FTPC, Livre des procédures fiscales or LPF) relating to transfer pricing documentation obligations (see 8.2 Transfer Pricing Documentation for documentation requirements). Administrative Doctrine (Bulletin Officiel des Finances Publiques – BOFiP) The French administrative doctrine includes in par - ticular the following guidance.
• BOI-BIC-BASE-80-10 – general transfer pricing principles. • BOI-BIC-BASE-80-10-10 – arm’s length principle and comparability analysis. • BOI-BIC-BASE-80-10-20 – transfer pricing audits. • BOI-BIC-BASE-80-10-30 and BOI-BIC- BASE-80-10-40 – transfer pricing documentation requirements (see 8.2 Transfer Pricing Documen- tation ). These guidelines provide interpretative guidance that is systematically relied upon by the FTA during tax audits. The OECD Transfer Pricing Guidelines are not legally binding under French law. However, they are consist - ently relied upon by the tax authorities, the administra - tive doctrine, and French courts. The OECD Guidelines are also expressly referenced in Double Tax Treaties. 1.2 Current Regime and Recent Changes The French transfer pricing legislation dates back to 1933. Although its wording has remained substantially unchanged, its interpretation has evolved over time through administrative guidance and case law. The French transfer pricing framework has been pro - gressively strengthened through mandatory docu - mentation requirements (see 8.2 Transfer Pricing Documentation ) and increased scrutiny during tax audits. • The formal requirement to maintain transfer pricing documentation was first introduced for financial years starting on or after 1 January 2009.
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