• Service: Tax, Global Transfer Pricing Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 9/18/2013

France - Mandatory transfer pricing documentation submission provision is passed 

September 18: In France, the National Assembly on 17 September 2013 passed legislation that implements stricter transfer pricing documentation requirements.

The transfer pricing documentation provision is part of a bill to address tax fraud and economic and financial crimes (read below for more information). The date of enactment of the provision currently is unclear, and its application is expected to be clarified soon.


Current transfer pricing documentation rules (codified under Article L 13AA of the French tax procedure law) apply for entities established in France having gross assets or a turnover of €400 million, or having a more than 50% direct or indirect shareholder or subsidiary meeting the €400 million threshold.

Under this rule, transfer pricing documentation must be available on the first day of the tax audit.

Mandatory submission rules

The new provision requires mandatory submission of an “abridged version” of the entity’s transfer pricing documentation within six months of the due date for filing the income tax return (in most instances, a date that is nine months after the close of the fiscal year).

The information that must be submitted each year includes general information on the group of associated enterprises:

  • A general description of its business activity, including any changes occurring during the fiscal year
  • A list of the main intangible assets owned, particularly patents, trademarks, trade names and know-how, related to the enterprise
  • A general description of the group’s transfer pricing policy and any changes made during the fiscal year
  • Specific information regarding the enterprise is to include:
  • A description of its business activity, including any changes occurring during the fiscal year
  • A summary of the transactions conducted with other associated enterprises, according to transaction type and amount, when the aggregate amount per transaction type exceeds €100,000
  • A presentation of the method(s) for determining transfer prices in accordance with the arm’s length principle, indicating the main method used and any changes made during the fiscal year

Penalty provision

No specific penalty for non-compliance may apply.

Despite a proposal in a March 2013 report to impose a 5% penalty on the overall cross-border transactions of the French entity, the penalty will be limited to instances of non-compliance of intragroup transactions with the arm’s length principle (which supposes a tax audit).

KPMG observation

Transfer pricing professionals in France note while the legislation provides for the mandatory annual submission of a transfer pricing documentation report, there had been many discussions focused on including in the transfer pricing documentation information of analytical accounts of the establishments in each country or territory. A more detailed and consistent requirement could be expected in the Finance Law 2014.

Part of larger bill against tax fraud

The transfer pricing documentation requirements are part of a larger package of legislation that came in the wake of the General Finance Inspectorate’s report of March 2013, but is more limited when compared with the numerous proposals made by the Senate. For example, proposals on the new definition of the abuse of law—the “back margins” or the inclusion of analytical accounts into the documentation—were not voted by the Assembly.

The bill contains a set of measures to increase the penalties (mainly criminal penalties) in the event of tax fraud, but also enhances the authority of the tax and customs administrations to address economic and financial crime.

For more information, contact a tax professional with Fidal Internationale* in Paris:

Pascal Luquet

+ 33 1 55 68 15 22

Kate Noakes

+ 33 1 55 68 16 57

Olivier Kiet

+33 1 55 68 16 15

Xavier Sotillos Jaime

+ 33 (0) 155 681 465

*Fidal Direction Internationale is a French law firm that is independent from KPMG and its member firms.

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