FRANCE LAW AND PRACTICE Contributed by: Caroline Silberztein, Benoît Granel, Jean-Baptiste Tristram, Lionel Ochs and Laura Nguyên-Lapierre, Baker McKenzie
tile range of the benchmark analysis, since the interquartile range is to be regarded as the arm’s length range. It also ruled that where the price of a transaction (or the margin of the tested com - pany) is outside of this interquartile range, the tax reassessment amount has to be determined by increasing this price (or this margin) to the nearest limit of the interquartile range and not to the median. However, in a GE Healthcare case (CE, 6 June 2018, No 409645; final), the Supreme Adminis - trative Court ruled that, considering the particu - lar circumstances of the case, a reassessment at the median of a benchmark analysis can be performed when the taxpayer’s results fall out - side of the interquartile range. Business Restructuring In a Nestlé Finance International case (CAA Paris, 5 February 2013, No 11PA02914; final), the Court examined the FTA’s claim that the intragroup transfer by a French company, to its Swiss-related company, of its cash pooling activ - ity without remuneration constituted an “indirect transfer of profits abroad” , to be reassessed. The Court ruled against the FTA. However, it did not address the question of whether there was a taxable transfer of activity that should have been compensated at arm’s length, but simply invalidated the assessment proposed by the FTA on the grounds that the comparability analysis performed by the FTA was not reliable. In a Microsoft France case (CAA Versailles, 16 February 2012, No 10VE00752; final), a French enterprise, acting as a distributor, was converted into a commercial agent of an Irish-related entity, and was compensated with commission fees calculated as a percentage of sales (25%) or a reimbursement of its costs plus 5%, whichever was higher. The 25% rate was replaced with a
decreasing rate and reduced after a period of five years, but the costs plus 5% guaranteed remuneration remained unchanged. The FTA challenged this decrease in the French agent’s commission rate. The Court cancelled the reas - sessment, ruling that a mere decrease in the commission rate did not justify a reassessment. The Court also rejected the comparables, which were proposed by the FTA, because they related to companies that assumed significantly greater risks than Microsoft France. In a SA SOPEBSA case (CE, 9 April 2014, No 366493 and CAA Versailles, 12 June 2014, No 11VE00643; final), it was considered that the conversion of a distributor into a commissionaire did not entail a transfer of clientele. In a Piaggio case (CE, 4 October 2019, No 418817, SAS Piaggio, confirmed by CAA Versailles, 6 July 2020, Nos 19VE03376– 19VE03377), the Supreme Administrative Court ruled that the French distributor of Piaggio prod - ucts had developed its own clientele, particularly due to its autonomous strategy of penetrating the French market. It considered that its conver - sion into a commercial agent led to a transfer of clientele and that the absence of remuneration of this transfer constituted an indirect transfer of profits abroad within the meaning of Article 57 of the FTC. In a Bupa Insurance Limited case (CE, 21 December 2022, No 450796; final), the Supreme Administrative Court reaffirmed the application of Article 57 of the FTC to branches and then ruled that a branch could, in principle, devel - op its own customer base, even though it was not a legal entity separate from its head office. Applying the analysis grid used in the Piaggio case to this case, the Supreme Administrative Court ruled that, in the absence of commercial
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