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

France - Transfer pricing presumed on transfers of functions, risks 

September 9:  Transfer pricing proposals, currently pending before the French parliament, if enacted would allow for a presumption that there has been a transfer of profits if an entity conducting business in France transfers functions or risks to a foreign related party.

The proposed legislation was introduced after the OECD’s base erosion and profit shifting (BEPS) initiative and a “white paper” on the taxation o fe-commence, published by the French tax authorities in January 2013.

Legislative proposals

The draft legislation consists of two provisions:

  • The transfer of functions or risks by an entity conducting business in France to a non-resident related party would trigger a presumption that there has been a transfer of “profits” (bénéfices) unless it can be demonstrated that the French entity received arm’s length financial consideration (proposed to be effective for tax years ending 31 December 2013 and later).
  • The theory of “abuse of law” (abus de droit) would be reinforced by applying it to transactions or arrangements that are “essentially” tax-driven—rather than “exclusively” tax-driven (proposed to be effective for adjustments beginning 1 January 2014).

What’s next?

The draft legislation must clear two readings in the Assemblée nationale and a second reading in the Senate before it can be enacted.

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

François Vincent

+33 (0)6 11 70 32 35

* FIDAL is an independent legal entity that is separate from KPMG International and its member firms.

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