FRANCE LAW AND PRACTICE Contributed by: Caroline Silberztein, Benoît Granel, Jean-Baptiste Tristram, Lionel Ochs and Laura Nguyên-Lapierre, Baker McKenzie
to June 2010, including proposed guidelines on low value adding intragroup services). In practice, such mark-up rates are often accept - ed for low value added services, although they have not been officially recognised as providing a safe harbour and should be applied only after careful review of the nature of the services. Furthermore, the OECD provides specific guid - ance relating to a particular category of intra - group services, referred to as low value adding intragroup services, and suggests that a cost plus 5% safe harbour rule may be appropriate for these services (Chapter VII, Section D of the OECD Guidelines, §7.61). While France has not taken any formal position on the implementation of such a safe harbour in its domestic legisla - tion, the French administrative guidelines indi - cate that – for TP documentation – a reduced description is sufficient for intragroup services, referred to as low value adding intragroup ser - vices under the OECD Guidelines. Interest Rate Interest paid to related parties by a French tax - payer is tax deductible up to the amount of inter - est paid at an interest rate that does not exceed the annual average rate of interest charged by French financial institutions on variable interest rate loans to enterprises with a duration of two years (Article 39-1,3° of the FTC). This interest rate is determined by the central bank of France and published every quarter in the Official Jour - nal . The list below provides the maximum allow - able interest rates for the last four quarters (FTA guidelines: BOI-BIC-CHG-50-50-30): • first quarter 2024 – 5.97%;
This limitation does not apply if the debtor can prove that the rate paid is the market rate (ie, the interest rate that it could have obtained from independent financial institutions under similar circumstances). 11.2 Rules on Savings Arising From Operating in the Jurisdiction French legislation does not provide specific rules governing savings arising from operations in France. 11.3 Unique Transfer Pricing Rules or Practices There are no notable unique rules or practices applicable to TP in France. 11.4 Financial Transactions There are no specific rules governing financial transactions, but the FTA published practical guidelines in January 2021 covering the deter - mination of interest rates for intragroup loans. The principles illustrated via practical examples are generally in line with Chapter X of the OECD Guidelines. 12. Co-Ordination With Customs Valuation 12.1 Co-Ordination Requirements Between Transfer Pricing and Customs Valuation While customs and TP valuations answer to independent sets of rules, they are necessarily interrelated. Indeed, in setting the TP of import - ed or exported goods, multinational companies make choices that have an immediate and direct effect on the customs value, which is the tax base to determine tax and customs duties due upon import.
• second quarter 2024 – 5.90%; • third quarter 2024 – 5.76%; and • fourth quarter 2024 – 5.37%.
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