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French transfer pricing information reporting requirement

France
The Act against Tax Fraud and Serious Economic & Financial Crime was passed on 5 November 2013. Article 223 quinquies B of the French Tax Code requires certain taxpayers to submit an “abridged” version of their TP documentation annually. Taxand France discusses the draft form which is to be provided by taxpayers under this new transfer pricing reporting requirement.

Following the OECD’s publication of its Action Plan on Base Erosion and Profit Shifting (BEPS), and in the wake of the General Finance Inspectorate’s report in March 2013 as well as various recent tax controversies (Amazon, Google and eBay cases in particular), the French Parliament has introduced additional requirements for certain taxpayers in the area of transfer pricing. The requirement only applies to legal entities established in France and subject to the French documentation requirement under the French Tax Procedure Code, ie French established entities:

  1. With an annual pre-tax turnover or gross assets on the balance sheet of EUR 400 million or more
  2. Holding directly or indirectly, at the end of the fiscal year, more than 50% of the share capital or voting rights of a legal entity ― a legal person, body, trust or comparable institution established or incorporated in France or outside France ― meeting one of the conditions mentioned in point 1
  3. Whose share capital or voting rights are, at the end of the fiscal year, over 50% held directly or indirectly by a legal entity meeting one of the conditions mentioned in point 1
  4. Belonging to a group subject to the tax regime provided in Article 223 A of the same Code when this group includes at least one legal entity meeting one of the conditions mentioned in points 1, 2 or 3

Contents of the annual transfer pricing information
Under Article 223 quinquies B the information that must be provided to the French Administration each year is:

  • General information on the group of associated enterprises:
    • A general description of its business activities including any changes which occurred 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:
    • A description of its business activities including any changes which occurred during the fiscal year
    • A summary of the transactions carried out with other associated enterprises, according to transaction type and amount, where the aggregate amount per transaction type exceeds EUR 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

Annual submission deadline and filing procedure
All documents and information must be submitted to the Administration within 6 months of the tax return filing. A specific deadline has been set for 2014; companies whose fiscal year closes on 31 December have to file their form by 20 November 2014.

An online filing procedure will soon be offered to businesses. In the meantime the declaration should be submitted through a digital format or an exchange platform. Companies may also file the declaration in paper form. The form consists of key information and is segmented into 2 main tables:

  • General information on the group of associated enterprises
  • Total amount, per type of transaction, for transactions of over EUR 100,000 carried out with other associated enterprises and transfer pricing methods

Applicable penalties

  • Failure to file the declaration is subject to a fine of EUR 150
  • Omissions or inaccuracies are subject to a fine of EUR 15 per failure (subject to limits ranging from EUR 60 to EUR 10,000)

Your Taxand contacts for further queries are:
Antoine Glaize
T. +33 1 70 38 88 28
E. antoine.glaize@arsene-taxand.com

Vincent Desoubries
T. +33 1 70 39 54 90
E. Vincent.desoubries@arsene-taxand.com

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Also published in Thomson Reuter's Taxnet Pro, September 2014

Taxand's Take

Article 223 quinquies B of the French tax code requires certain taxpayers to fill an abridged transfer pricing tax form to be submitted to the French Tax Administration within 6 months of the tax return filing.

French entities falling within the scope of this new reporting obligation should review their intra-group transactions and ensure all related information is available and properly treated.

Taxand's Take Author