FRANCE LAW AND PRACTICE Contributed by: Caroline Silberztein, Benoît Granel, Jean-Baptiste Tristram, Lionel Ochs and Laura Nguyên-Lapierre, Baker McKenzie
10. Relevance of the United Nations Practical Manual on Transfer Pricing 10.1 Impact of UN Practical Manual on Transfer Pricing The UN Practical Manual on Transfer Pricing was drafted by a group of experts acting in their personal capacity and endorsed by the UN Tax Committee. It is not binding under French law. In contrast to the OECD Transfer Pricing Guide - lines, there is no reference to the UN Manual in the French administrative guidelines, and recourse thereto during tax audits is not com - mon. However, for treaties concluded between France and non-OECD economies, the UN Prac - tical Manual may prove a useful interpretation tool. 11. Safe Harbours or Other Unique Rules 11.1 Transfer Pricing Safe Harbours TP Documentation While not a safe harbour per se, the TP doc - umentation rules provide for a simplification measure. Assuming that, for a given category of transactions, the aggregated amount is below EUR100,000, the TP documentation should mention the transaction, but there is no need to present a detailed analysis of it in the TP docu - mentation. This does not protect the taxpayer from any reassessment. Low Value Added Services For low value added services, the EU Joint Transfer Pricing Forum (JTPF) published guide - lines that include a reference to mark-ups usual - ly applied for routine services (3% to 10%; often 5%) (Communication 2011/16 from the Commis - sion on the work of the JTPF from April 2009
9.4 Impact of BEPS 2.0 France supports the ongoing BEPS 2.0 work on the tax challenges presented by the digitalisa - tion of the economy, in particular the two-pillar
approach. Pillar One
France has supported and taken part in discus - sions related to Pillar One. To date, France has not issued official positions concerning imple - mentation. FTA Guidelines clarifying France’s position on Amount B are expected to be
released. Pillar Two
France has transposed into its domestic law Directive (EU) 2022/2523 ensuring a global mini - mum level of taxation, which itself incorporates the OECD Pillar Two Model Rules. The income inclusion rule and qualified domestic top-up tax apply to FYs beginning on or after 31 December 2023, and the undertaxed payment rules apply to FYs beginning on or after 31 December 2024. Further amendments and additions to the Pillar Two rules were introduced into French law with the Finance Law of 2025, to take into account the OECD’s 2023 administrative guidance. The OECD’s 2024 and 2025 administrative guidance has not been incorporated into French law. The first FTA guidelines are expected to be released in 2025. 9.5 Entities Bearing the Risk of Another Entity’s Operations Low-risk entities are possible subject to consist - ency with functional analysis and, in particular, the risk control function. In the case of low-risk entities, the TNMM is often the most appropri - ate method.
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