FRANCE Trends and Developments 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
Transfer Pricing Audits in France: Intensified Scrutiny, Technical Depth and Evolving Practice Transfer pricing in France has clearly evolved in recent years. The French tax authorities (FTA) have developed significant experience, technical depth and confidence in their approach to transfer pricing matters. This evolution is particularly apparent during tax audits, where discussions with taxpayers are now more technically sophisticated and detailed. In practice, this evolution has two main consequenc - es. First, the FTA’s expectations have increased sig - nificantly, particularly with respect to documentation quality and the robustness of economic analyses. Second, the quality of the dialogue has improved: the FTA is now more willing to engage in substantive tech - nical discussions, including complex arguments, pro - vided these are properly documented and supported. For multinational enterprises (MNEs) with operations in France, this fundamentally changes the way trans - fer pricing must be managed. It is no longer sufficient to adopt a purely “tick‑the‑box” approach to compli - ance. Given both the increased expertise of the FTA and the fact that transfer pricing documentation has become legally opposable as from 2024, positions taken in the documentation must be rigorously defen - sible and grounded in a robust economic rationale. The French Court of Auditors’ 2025 report on the activities of the FTA highlights that making transfer pricing documentation opposable to taxpayers has significantly strengthened the FTA’s audit powers. The report further states that transfer pricing is the “prima - ry mechanism examined” when auditing multinational enterprises. This intensified focus is also reflected in
resources and outcomes: 256 new positions were created within the FTA’s audit function in 2024 alone, while reassessed taxes and penalties (all taxes com - bined) reached EUR16.7 billion in 2024, representing an increase of EUR1.5 billion year‑on‑year. In parallel, reassessments arising from external audits increased by more than 12%. In addition, consistency in the application and docu - mentation of transfer pricing policies across jurisdic - tions has become increasingly critical, particularly in light of the FTA’s frequent use of international admin - istrative assistance mechanisms. This need for in‑depth substantiation is even more critical as well‑prepared and technically robust defen - sive positions are now genuinely taken into account during tax audits. In practice, this may lead to the par - tial or full withdrawal of reassessments at the pre‑liti - gation stage, sometimes even before escalation within the tax administration. This further illustrates both the increased technical sophistication of the FTA and a broader shift in audit dynamics. Against this background, the following sections outline the main trends and developments currently observed in France, reflecting the increased level of technical engagement between taxpayers and the FTA, with a particular focus on: • rising expectations on documentation and eco - nomic substance; • key areas of scrutiny in tax audits (intangibles, business restructurings and financial transactions); and
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