FRANCE LAW AND PRACTICE Contributed by: Caroline Silberztein, Benoît Granel, Jean-Baptiste Tristram, Lionel Ochs and Laura Nguyên-Lapierre, Baker McKenzie
sion or inaccuracy is subject to the same penal - ties as for the TP disclosure form. 8.2 Transfer Pricing Documentation In France, the CbC reporting requirements are separate from the TP documentation require - ments. TP Documentation for Large Enterprises (Master File and Local File) The outline of the TP documentation required for large enterprises under Article L 13 AA of the FBTP follows the OECD/G20 Base Erosion and Profit Shifting (BEPS) Action 13 recommenda - tion on the master file and local file. An OECD master file and local file are required for legal entities established in France (includ - ing any French permanent establishments of for - eign enterprises) that meet any of the following thresholds: • (i) annual sales revenue or total gross assets on the balance sheet equal to or higher than EUR150 million (EUR400 million for FYs opened before 1 January 2024); • (ii) ownership at the end of the FY, directly or indirectly, of more than 50% of the capital or voting rights of a legal entity – ie, a legal person, organisation, trust or comparable institution, whether established or constituted in France or outside France – that meets one of the conditions set forth under point (i); • (iii) more than 50% ownership of the capital or voting rights at the end of the FY, directly or indirectly, by a legal entity meeting one of the conditions set forth under point (i); or • (iv) membership of a French tax-consolidated group that includes at least one legal person meeting one of the conditions set forth under point (i), (ii) or (iii).
Enterprises that meet any of the above-listed criteria should provide the FTA (upon request) with documentation that justifies the TP policy applied for transactions of any nature carried out with foreign associated enterprises; this also includes transactions between headquar - ters and branches (FTA guidelines: BOI-BIC- BASE-80-10-20 and BOI-BIC-BASE-80-10-40). For FYs beginning on or after 1 January 2024, where the TP method deviates from the one pro - vided for in the documentation made available to the FTA, the difference between the profits and the amount it would have reached if this documentation had been respected is deemed to constitute a transferred profit within the mean - ing of Article 57 of the FTC, unless the taxpayer demonstrates otherwise. TP Documentation for Other Enterprises Article L 13 B of the FBTP applies to enterprises that do not fall within the scope of Article L 13 AA. It provides that if – during a tax audit – the FTA gathers elements entailing a presumption that an enterprise has transferred profits abroad, within the meaning of Article 57 of the FTC, it may request information and documents speci - fying the following: • the nature of the relationships falling within the scope of Article 57 of the FTC between this enterprise and one or several enterprises exploited outside France or companies or groupings established outside France; • the method applied to determine the pricing of industrial, commercial or financial transac - tions, which it carries out with the enterprises, companies or groupings mentioned under point (i) and supporting elements as well as the counterparts granted, if any; • the activities performed by the enterprises, companies or groupings referred to under
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