• Service: Tax, Global Transfer Pricing Services, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 6/11/2013

France - Recommendations from report on tax evasion, transfer pricing 

June 11:  The French tax authorities have released a report that addresses tax evasion and the effects of transfer pricing.

The report—Mission de comparaisons internationales sur la lutte contre l’évasion fiscale via les échanges économiques et financiers intra-groupe—is dated March 2013.

One of the report’s authors was also the co-author of France’s white paper on the taxation of eCommerce released in January 2013.

Recommendations for transfer pricing changes

The French tax authorities’ report on tax evasion and transfer pricing compares France’s transfer pricing system with the systems in Canada, Germany, the Netherlands, the United Kingdom, and the United States. The report concludes that France’s transfer pricing rules are out of step with these international counterparts.

Thus, the French report on tax evasion and transfer pricing makes the following recommendations:

  • Amend France’s law to better harmonize the provisions with the arm’s length principle pursuant to the OECD guidelines
  • Reverse the burden of proof to taxpayers in certain cases considered to be of “greater risk”
  • Change the basis for calculating and applying a penalty so that the penalty remains applicable in instances when taxpayers have failed to properly document their transfer pricing practices
  • Allow mandatory access to taxpayers’ data in electronic format (comptabilité analytique)
  • Aim to apply the profit-split method more frequently
  • End the practice of not requiring taxpayers to pay any part of the income tax relating to a transfer pricing adjustment when the taxpayer files for resolution of double taxation pursuant to the mutual agreement procedure

It is expected that some (or all) of these measures could find their way into the upcoming Finance Bill for 2014.

Contact a tax professional with KPMG's Global Transfer Pricing Services.

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