FRANCE LAW AND PRACTICE Contributed by: Caroline Silberztein, Benoît Granel, Jean-Baptiste Tristram, Lionel Ochs and Laura Nguyên-Lapierre, Baker McKenzie
4. Intangibles 4.1 Notable Rules
4.3 Cost Sharing/Cost Contribution Arrangements The French administrative guidelines do not provide detailed information on cost-sharing arrangements, but do recognise and define them as “an agreement allowing related enterprises to share the costs and risks of producing or obtain- ing goods, services or rights and to determine the nature and extent of each participant’s inter- est in such goods, services or rights” (FTA guide - lines: BOI-BIC-BASE-80-10-10 §220). 5. Adjustments 5.1 Upward Transfer Pricing Adjustments Two situations need to be distinguished. • Assuming the tax filing deadline has not expired, the taxpayer can make any adjust - ment to its tax returns before the deadline for income tax reporting. • Assuming the tax filing deadline has expired, a taxpayer can file amending tax returns if the TP adjustments are a result of an omission or an error committed at the FTA’s expense; in this situation, the taxpayer will be subject to late-payment interest (possibly reduced) and (potentially) penalties. A taxpayer can submit a claim (which can be in the form of an amending tax return) to the FTA if the TP adjustments are a result of an omission or an error committed at its own expense. See 13.1 Options and Requirements in Transfer Pric- ing Controversies regarding the timing of the submission of such claim. 5.2 Secondary Transfer Pricing Adjustments In case of TP adjustments, the profits deemed to be transferred constitute distributed income for which withholding tax may be levied subject to
The FTA states that “There is no specific legisla - tion or regulation on transactions involving intan- gibles but the French administrative doctrine provides some general guidance in this respect” (OECD, France Transfer Pricing Country Profile, December 2021). In accordance with this state - ment, the information contained in the French administrative guidelines is rather limited, and the statements are general. 4.2 Hard-to-Value Intangibles French law defines hard-to-value-intangibles (HTVI) by reference to the OECD definition (see OECD Transfer Pricing Guidelines 2022, para - graph 6.189) – ie, assets for which, at the time of transfer, there are no reliable comparables or sufficiently certain forecasts of future cash flows/ revenues, or of the likely success of the transac - tion. The Finance Law of 2024 introduced specific rules regarding HTVI into French law, most nota - bly the following: • the FTA can adjust the value of HTVI trans - ferred between associated enterprises based on results subsequent to the financial year (FY) in which the transaction took place, except in certain limited cases; • the FTA has an extended right of reassess - ment that expires at the end of the sixth year (instead of the third year) following the year in respect of which the tax is due; and • the guarantee relating to the non-renewal of an audit or examination of accounts is not applicable (FTA guidelines: BOI-BIC- BASE-80-10-10 §232).
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