• Service: Tax, Global Transfer Pricing Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 12/31/2013

France - Transfer pricing provisions enacted in Finance Bill 2014  

December 31: The Finance Bill for 2014 (published 30 December 2013) contains transfer pricing provisions, but certain controversial provisions were “censured”—i.e., rejected as unconstitutional—by the Constitutional Court (Conseil Constitutionnel).


In brief, the transfer pricing provisions in the Finance Bill for 2014 include:

  • A limit on the tax deductibility of interest on related-party loans (i.e., interest is not deductible in situations when the tax, at the lender level, is not equal to a minimum of 25% of the amount of corporate income tax that would have been due in France under ordinary circumstances)

  • A requirement for mandatory supply of “analytical accounts” to the French tax authorities during a tax audit (1) if the taxpayer has total gross assets of at least €400 million, or (2) if the taxpayer’s turnover exceeds a threshold amount of €152.4 million and the taxpayer’s main activity is selling goods, or turnover of €76.2 million for other taxpayers

  • A requirement for mandatory supply of “consolidated accounts” to the French tax authorities during a tax audit of certain taxpayers (e.g., commercial companies subject to the consolidated account rules under the French Commercial Code)

  • Repeal of a provision automatically staying the collection of tax when a French taxpayer files a mutual procedure agreement (MAP) case (the automatic postponement of tax collection continues to apply for MAP cases prior to 1 January 2014)

Rejected provisions

Among the provisions rejected as “unconstitutional” by the French Constitutional Counsel are the following transfer pricing-related measures:

  • An increased penalty of 0.5% based on the taxpayer’s turnover in situations when the taxpayer fails to provide the tax inspector with a “compliant” transfer pricing documentation report (thus, the penalty remains at 5% of the re-assessed amount)

  • A provision requiring “compulsory remuneration” for the transfer of risk(s) or function(s) that stem from a French entity’s transfers to a foreign related entity (no burden of proof for the French company that it benefited from appropriate compensation if its operating results during the two fiscal years (FYs) following the transfer are less (by at least 20%) than the average amount of the operating results derived from the three FYs prior to the change)

KPMG observation

The French government is reported to be modifying the regulations that concern tax fraud and transfers of benefits abroad, and it is anticipated that further reinforcement measures could be specifically added by new law.

For more information, contact a tax professional with KPMG’s Global Transfer Pricing Services group (Fidal*) in Paris:

Pascal Luquet

+ 33 1 55 68 15 22

Olivier Kiet

+ 33 1 55 68 16 15

Kate Noakes

+ 33 1 55 68 16 57

Xavier Sotillos Jaime

+33 1 55 68 14 85

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

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