Worldwide transfer pricing reference guide 2014

France (continued)
Documentation requirements (continued)
• Specific information regarding the French entity (activities carried out, changes in the last FY, list of the inter-company transactions if the
aggregated amount per type of transaction exceeds €100,000, presentation of the transfer pricing methods used for determining arm’s
length transfer prices, changes that occurred in the last FY).)
As such, no detailed functional analyses or economic analyses will be required in this “light” documentation report and the penalty
for a breach of this provision is minimal (€150). However, the purpose of this new provision is to be understood as an enhancement of
the French Tax Authorities (FTA) capability to identify taxpayers with the highest transfer pricing exposure so as to allocate their audit
resources accordingly. Such an approach — where taxpayers fail to file the report would of course be highly scrutinized — is in line with the
latest OECD developments described in the White Paper on Documentation. Accordingly, the preparation of this “light” documentation
report should therefore be seen as an important extension to the overall — already existing — obligation of documenting intra-group
transactions in France.
Pursuant to Article L 13AB FPTC, all French companies involved in transactions with companies located in non-cooperative jurisdictions
(as defined by the Article 238-0 A FTC) have to provide, in addition to the documentation described in Article L 13AA FPTC,
supplementary documentation including all documents normally required by the FTA from companies subject to Corporate Income Tax.
Such requirement notably includes French accounting-compliant balance sheet and the profit and loss statement of the foreign company.
French taxpayers that do not meet the conditions set out in Articles L 13AA and L 13AB FPTC nevertheless remain bound by the general
transfer pricing documentation requirements set out in Article L 13B FPTC and the general information sharing rule set out in
Article L 10 FPTC.
Documentation deadlines
General transfer pricing documentation requirement (Article L 13B FPTC):
Upon the FTA’s request, documentation must be submitted within 60 days, though it may be possible to obtain a 30 day extension in
exceptional circumstances. Exceeding such deadline may trigger penalties mentioned previously.
Special transfer pricing documentation requirement (Articles L 13AA and L 13AB FPTC):
Upon the FTA’s request, documentation must be submitted immediately upon first request made by the tax inspector in the course of
an audit. If not, the FTA will send a formal claim for the documentation that will provide for a 30 day deadline, after which penalties for
documentation failure will apply.
Statute of limitations on transfer pricing assessments
The statute of limitations for transfer pricing adjustments is the same as for all French corporate tax assessments: generally, three years
following the year for which the tax is due (it might be longer under certain circumstances; e.g., permanent establishment qualifications,
loss carry forwards). A special extension can apply in case of a request for international tax assistance (Article L 188A FTPC).
French regulations provided that in cases where MAP relief is sought (to avoid double taxation on the ground of a tax treaty or the
European Arbitration Convention), tax collection can currently be suspended during the entire mutual agreement process, and
postponed until the competent authorities reach an agreement (Article L 189A of the FPTC). The 2014 French Finance Bill terminates
this provision for MAPs opened as from 1 January 2014. It will thus no longer be possible to defer the payment of the French transfer
pricing reassessment by opening a MAP.
Return disclosures/related party disclosures
In the event of a specific request from the tax authorities at the time of an audit (on the basis of either Articles L 13AA and L 13AB FTPC,
or Article L 13B FPTC), there is an obligation to disclose the nature of the relationship between the taxpayer and the related parties
(i.e., the links of dependence between the French audited entity and the related parties). These legal provisions also provide for an
obligation to disclose the activities of the related parties.
obligation to disclose the activities of the related parties.
Transfer pricing-specific returns
See above the light documentation to be submitted to the French tax Authorities provided by new article 223 quinquies B of the French
General Tax Code, for companies that satisfy specific criteria.
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