FRANCE Law and Practice Contributed by: Alexis Popov, Martin Serre and Stéphane Duchesne, &Co Advisory
authorisation under Article 73 of the UCC may permit the use of predetermined adjustment ratios, enabling the declaration of a final customs value at the time of import without the need for subsequent corrections. These mechanisms require prior authorisation from French Customs and are subject to detailed review. In particular, customs authorities assess the consist - ency of the pricing policy, the nature and methodology of the adjustments, and the reliability of the support - ing data. Financial guarantees may also be required where the final customs value remains uncertain. The interaction between transfer pricing and customs valuation has been further shaped by the Court of Jus - tice of the European Union’s Hamamatsu decision (20 December 2017, C–529/16), which questioned the acceptability of customs values based on transfer prices subject to retroactive adjustments. Despite this decision, French Customs continues to accept transfer pricing-based valuations where appropriate authorisations are in place, although the issue remains sensitive at EU level. In practice, effective co-ordination between transfer pricing and customs functions is a key compliance issue. Taxpayers must ensure consistency between transfer pricing policies, customs declarations, and financial data. The increasing use of data analytics by tax and customs authorities has further reinforced the need for alignment. Failure to anticipate these interac - tions may result in additional customs duties, penal - ties, or disputes. 13. Controversy Process 13.1 Options and Requirements in Transfer Pricing Controversies Transfer pricing controversies in France follow a struc - tured process comprising both a pre-litigation phase and a litigation phase. The main steps are as follows: • oral and adversarial debate; • written phase;
During the pre-litigation phase, taxpayers initially engage in an oral and adversarial discussion with the tax audit team. This is followed by the submission of written responses to the reassessment proposal issued by the French Tax Authorities. Taxpayers may further escalate discussions within the tax administra - tion by submitting hierarchical appeals, notably to the chief tax inspector and the departmental interlocutor. In addition, taxpayers have the option to defend their position before a non-binding tax committee ( Com- mission des impôts directs et des taxes sur le chiffre d’affaires ). If the dispute is not resolved, the taxpayer may initiate the litigation phase by filing a formal claim pursuant to Article R190–1 of the French Tax Procedure Code. Where such claim is rejected or remains unanswered, the matter may be brought before the Administrative Tribunal. As a general rule, the disputed tax must be paid prior to initiating litigation. However, a deferral of payment may be requested under Article L277 of the LPF, sub - ject to the provision of appropriate financial guaran - tees. Judicial proceedings involve three levels of jurisdic - tion. The first level is the Administrative Tribunal ( tribu- nal administratif ). Decisions may be appealed before the Administrative Court of Appeal ( Cour administra- tive d’appel ) and, ultimately, before the highest admin - istrative court, the Conseil d’État. 14. Judicial Precedent 14.1 Judicial Precedent on Transfer Pricing Judicial precedent plays a central role in the inter - pretation of transfer pricing rules in France. French courts have developed a consistent body of case law interpreting Article 57 of the French Tax Code. This case law addresses key issues such as the burden of proof, comparability factors (including functional analysis), the use of comparables, the determination of the appropriate arm’s length reference value, and the treatment of reorganisations, among others (see 14.2 Significant Court Rulings ).
• hierarchical appeals; • tax committee; and • administrative court jurisdiction.
88 CHAMBERS.COM
Powered by FlippingBook