FRANCE Law and Practice Contributed by: Alexis Popov, Martin Serre and Stéphane Duchesne, &Co Advisory
a result, the new charter compels taxpayers to begin preparations significantly earlier, particularly where a bilateral negotiation is anticipated or where the fact pattern involves restructurings, intangibles, or finan - cial transactions that require detailed supporting doc - umentation. 7.6 APA User Fees France does not charge a filing fee for APA applica - tions. This remains one of the attractive features of the French programme, particularly when compared with jurisdictions that impose substantial user fees for bilateral or multilateral APAs. The absence of a formal filing fee does not, however, eliminate the practical costs associated with the process, given the level of preparation required under the 2026 charter. In practice, the main costs arise from the preparation of the APA file, the co-ordination of bilateral submis - sions and the level of responsiveness expected dur - ing the review phase. The charter requires taxpayers to submit a detailed pre-filing presentation, provide a complete file by a fixed deadline, and respond promptly to any follow-up requests. 7.7 Duration of APA Cover French APAs are generally concluded for a period of five years. The administrative doctrine indicates that the duration is determined during the negotiation pro - cess and that five years serves as the usual bench - mark. However, the final term may vary depending on several factors, including the nature of the business, the sector concerned, the specificity of the products, and the need to align with agreements already con - cluded in other jurisdictions. Renewal remains possible but is not automatic. The approach adopted by the French competent authority may evolve to reflect industry practices or develop - ments identified in the analysis of certain transactions during international negotiations. The charter empha - sises the need for a new formal submission to be filed within the required timeframe. A further practical development concerns the strength - ening of post-signature monitoring. The taxpayer is required to file an annual report demonstrating how the agreed methodology has been applied. The char -
ter specifies that failure to remedy the absence of such a report within 30 days following formal notice may result in termination of the APA for the year con - cerned. As a consequence, the practical durability of an APA depends not only on the initial negotiation, but also on consistent and disciplined year-by-year compliance. 7.8 Retroactive Effect for APAs French practice allows an APA to have retroactive effect, but only where this is expressly provided for. Current administrative guidance states that an APA may include revision or adjustment mechanisms, and that its effective date is one of the core terms of the agreement. The APA charter expressly refers to the possibility of a roll-back, which in practice is limited to three years. A roll-back may be requested by the taxpayer or pro - posed by the French competent authority in order to align the APA with related proceedings, including a MAP. This means that the French APA programme is not limited to providing prospective certainty in a nar - row sense. In appropriate cases, it can also help to resolve earlier years, provided that the relevant facts are sufficiently consistent across the period con - cerned. The position remains highly fact-sensitive, and retroactive application is not automatic. The tax - payer must demonstrate that the same transfer pricing method and underlying assumptions remain valid for the prior years. 8. Penalties and Documentation 8.1 Transfer Pricing Penalties and Defences Transfer pricing reassessments may give rise to sig - nificant penalties. These include late payment inter - est as well as penalties for deliberate breaches. The French Tax Authorities may apply a penalty for bad faith amounting to 40%, which can be increased to 80% in cases of fraud or abuse. In addition to standard tax law penalties, specific pen - alties apply in cases of failure to comply with transfer pricing documentation requirements. Under Article 1735 ter of the French Tax Code, failure to provide complete transfer pricing documentation may result
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