Global

Details

  • Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 6/28/2013

France - Legislators focus on multinationals; functions, risks transferred abroad 

June 28: The chairman of the French Senate’s finance committee on 26 June 2013 addressed issues concerning tax audits of multinational companies, and stated that proposed legislation would be introduced to address instances with multinational entities transfer functions and risks abroad to reduce the tax effects in France.

Finance committee chairman Philippe Marini stated that a review conducted for the first half of 2013, by the tax audit department of the French tax authorities, revealed that several multinational groups operating in various economic sectors—e.g., industrial companies, service suppliers, and in particular internet service providers—had conducted operations and had used tax mechanisms to reduce their taxation in France.


The findings also revealed difficulties encountered by the tax authorities in addressing these tax mechanisms during the course of the tax examinations.


In order to preserve public finance and restore an undistorted competition, and in applying principles of “comparable activity and equal taxation”, Marini expressed an opinion that now is the time to end the identified abusive practices.


It was reported that investigations conducted during recent months revealed the presence of “tax loopholes” in certain anti-abuse legislative provisions, and that the efficiency of the subject provisions has been reduced by globalization of the economy.

Proposed changes

Proposed legislation would aim at countering tax evasion and fraud by large multinational enterprises. The proposal would:


  • Provide that a transfer of functions and risks outside France would be viewed and treated as an “abnormal” transfer of profits abroad, unless the taxpayer could rebut this presumption (thus, the burden of proof would shift to the taxpayer)
  • Strengthen the anti-abuse law procedure by expanding its scope to transactions found to be essentially “tax driven” (as opposed to the current law, which looks at exclusively tax driven constructions)

KPMG observation

Tax professionals* in France note that this legislative change could represent France’s response to investigations being currently performed at the OECD level under the “BEPS” (Base Erosion, Profit Shifting) initiative.



For more information, contact a tax professional at Fidal Direction Internationale* in Paris or the French KPMG Tax Center in New York:


Gilles Galinier-Warrain, French Tax Center, KPMG LLP, New York

+1 212-954-8605


Olivier Ferrari, Tax Partner

+33 (0)1 55 68 14 76


Patrick Seroin, Tax Partner

+33 (0)1 55 68 15 93


Audrey-Laure Illouz, Tax Director

+ 33 (0)1 55 68 14 95


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




©2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.


The KPMG logo and name are trademarks of KPMG International.


KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.


The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

 

Share this

Share this

Subscribe

Subscribe to receive the latest TaxNewsFlash email alerts (you must select the option for TaxNewsFlash)


Already a Subscriber? Login


Not a member? Subscribe now

Contact us