FRANCE Law and Practice Contributed by: Alexis Popov, Martin Serre and Stéphane Duchesne, &Co Advisory
return. This requirement is provided for under Article 223 quinquies B of the French Tax Code, through tax return form “2257-SD”. Taxpayers must report general information regarding the group and the local entity, as well as a list of intra-group transactions which, by nature, exceed EUR100,000. This simplified trans - fer pricing documentation applies to French entities whose statutory turnover or gross assets (or those of their shareholders or subsidiaries) exceed EUR50 million. Country-by-country reporting (CbCR) requirements apply to entities that are part of a group whose consol - idated turnover exceeds EUR750 million. The CbCR filing must be made within 12 months following the filing of the tax returns, in accordance with Article 223 quinquies C of the CGI, through tax return form “2258-SD”. 9. Alignment With OECD Guidelines 9.1 Alignment and Differences French transfer pricing rules are closely aligned with the OECD Guidelines. These Guidelines are also relied upon in the application of double tax treaties, as Arti - cle 9 of the OECD Model Tax Convention expressly refers to the OECD Guidelines. French administrative doctrine likewise explicitly refers to the OECD Guidelines for the application of the arm’s length principle. In practice, the OECD Guidelines govern the conduct of functional analyses, the selection of appropriate transfer pricing methods, as well as comparability and benchmarking analyses. Lastly, French administrative courts also refer to and rely on the OECD Guidelines in their case law. 9.2 Arm’s Length Principle French tax law does not provide for any exception permitting a departure from the arm’s length principle. As a result, all intra-group transactions must be priced as if they were concluded between independent enterprises operating under comparable conditions. This requirement applies uniformly to all categories of transactions, including the provision of goods and
services, financial arrangements, and dealings with permanent establishments. 9.3 Impact of the Base Erosion and Profit Shifting (BEPS) Project The BEPS project has had a significant influence on the French transfer pricing landscape. France has implemented the main BEPS measures, particularly those relating to documentation requirements, trans - actions involving intangibles, and financial transac - tions. The introduction of the Master File, Local File, and country-by-country reporting has considerably strengthened the transfer pricing documentation framework and increased the level of information available to the tax authorities. The BEPS focus on value creation has also been incorporated into audit practice. The French Tax Authorities now systematically analyse DEMPE func - tions in transactions involving intangibles. Business restructurings are closely examined, particularly with regard to potential transfers of profit potential. In addition, dispute resolution mechanisms have been reinforced. France applies both the EU Arbitra - tion Convention and the mutual agreement procedure framework, which have improved the resolution of double taxation cases. Lastly, the implementation of strict interest limitation rules under Article 212 bis of the French Tax Code, reflecting BEPS Action 4, has had a material impact on intragroup financing structures. 9.4 Impact of BEPS 2.0 France has positioned itself as one of the most proac - tive jurisdictions in the implementation of BEPS 2.0. It has taken an active role in both the development and domestic implementation of Pillar Two, while continu - ing to support the adoption of a multilateral solution for Pillar One. Pillar Two has been implemented through the trans - position of Directive (EU) 2022/2523 into French law. Article 33 of the Finance Act for 2024, supplemented by Article 53 of the Finance Act for 2025, introduced
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