FRANCE Law and Practice Contributed by: Anthony Roustan and Cédric Dubucq, Bruzzo Dubucq
8. Mutual Agreement Procedures and Arbitration 8.1 Availability and Legal Basis France has a well-established mutual agreement pro - cedure (MAP) programme. The legal bases include: • bilateral treaty provisions modelled on Article 25 of the OECD Model; • the EU Arbitration Convention for transfer pricing disputes; • the EU Tax Dispute Resolution Directive (2017/1852), providing a right to arbitration if agreement is not reached within two to three years; and • the MLI provisions. The competent authority is the Direction de la lég- islation fiscale (DLF). France actively uses MAPs for transfer pricing, permanent establishment attribution, and income characterisation disputes. 8.2 Application Deadlines The deadline to submit a MAP request is generally three years from the first notification of the action resulting in taxation not in accordance with the appli - cable convention. This time limit applies under most bilateral treaties, the EU Arbitration Convention, the EU Tax Dispute Resolution Directive and the MLI. It is advisable to initiate MAP requests early, even before domestic appeal proceedings are completed, to pre - serve rights and ensure timely resolution. 8.3 Mandatory Binding Arbitration Mandatory binding arbitration is available through several instruments: • the EU Arbitration Convention – specifically for transfer pricing disputes, with a two-year resolution deadline; • the EU Tax Dispute Resolution Directive – broader in scope, with a default decision-making mecha - nism if states fail to agree; and
• the MLI Part VI – to which France opted in, accept - ing both the “last best offer” and “independent opinion” approaches, depending on the treaty partner. General bilateral treaties do not include mandatory arbitration, though some newer conventions incorpo - rate specific arbitration clauses.
9. Dispute Prevention 9.1 Advance Pricing Agreements
France has an active advance pricing agreement (APA) programme administered by the central administra - tion. Unilateral, bilateral or multilateral APAs are avail - able, with bilateral APAs strongly encouraged by the French authorities. The process involves pre-filing meetings, a formal application with functional and economic analysis, competent authority negotiations for bilateral APAs, and agreements typically covering three to five years with possibility of roll-back. France is among the most active European countries in terms of APA activity. 9.2 Other Mechanisms Tax Rulings Tax rulings ( rescrits fiscaux ) provide binding advance positions from the tax authorities on specific situa - tions, including cross-border transactions. This is a valuable tool for taxpayers seeking certainty on novel questions. Tax rulings in France are cost-free. Tax authorities have six months to answer (except for specific rulings). Co-Operative Compliance France operates a relation de confiance (co-operative compliance) programme for large enterprises, offering real-time transparency in exchange for faster issue resolution and reduced adversarial audits. The DGFiP has expressed interest in extending this programme to medium-sized enterprises.
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