FRANCE LAW AND PRACTICE Contributed by: Caroline Silberztein, Benoît Granel, Jean-Baptiste Tristram, Lionel Ochs and Laura Nguyên-Lapierre, Baker McKenzie
Effective – MAP Peer Review Report, France (Stage 2).
or to a complaint in the context of a tax audit during the previous six years. TP Penalties The FTA often applies a 10% penalty for failure to file a withholding tax return in case of char - acterisation of deemed dividends (See 5.2 Sec- ondary Transfer Pricing Adjustments ). For taxpayers falling within the scope of Article L 13 AA of the FBTP and required to present com - plete TP documentation (master file and local file) upon the start of the audit, failure to do so entails the application of a penalty equal to the greater of these two amounts: • 0.5% of the amount of the transactions still insufficiently documented after the formal notice; or • 5% of the amount of the TP reassessments. The above penalty cannot be less than EUR50,000 per fiscal year, or EUR10,000 for offences (ie, failure to present complete TP doc - umentation) committed before 1 January 2024 (Article 1735-ter of the FTC). For taxpayers not falling within the scope of Arti - cle L 13 AA of the FBTP, limited TP documenta - tion is required. Failure to provide it upon request leads to a penalty of EUR10,000 per fiscal year (Article 1735 of the FTC). Failure to file a TP disclosure form entails the application of general penalties of EUR150 and a penalty of EUR15 per omission or inaccuracy, and cannot be lower than EUR60 or higher than EUR10,000 (Article 1729 B of the FTC). Failure to file a complete CbC report (CbCR) entails the application of a penalty up to EUR100,000 (Article 1729 F of the FTC). Omis -
8. Penalties and Documentation 8.1 Transfer Pricing Penalties and Defences General Penalties The FTA may apply the following main tax penal - ties in the case of TP adjustments, in addition to late payment interest: • a 40 “bad faith” penalty in case of errors or inaccuracies in tax returns resulting from a deliberate failure, increased to 80% in case of abuse of law, fraudulent behaviour or con - cealment of price; and • a 10% penalty in case of late filing if the late tax return is filed by the taxpayer prior to any notice of the tax authorities or within 30 days after an initial official notice ( mise en demeure ), increased to 40% in case of a failure to file within 30 days after an official notice (the penalty may be increased by up to 80% in cases of concealed activity). For notifications of proposed assessments issued after 24 October 2018, the FTA has to report to the prosecutor’s office factual ele - ments that gave rise to a tax assessment over EUR100,000 and that lead to the application of any of the following: • a 100% penalty in cases of unilateral reassessment ( procédure de taxation et d’évaluation d’office ); • an 80% penalty in case of concealed activity (eg, undisclosed permanent establishment); or • a 40% penalty where the taxpayer has already been subject to one of these penalties
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