France goes after local level profits and local expenses
01 July 2011
The French requirements for transfer pricing documentation have to a certain extent secured the position of French subsidiaries. Multinational companies now face confusion from French tax authorities between the shareholders and management decisions. Financial consequences are huge. Isabelle Vendeville of Redlink investigates.
 |
| The new documentation requirements have huge financial consequences for French companies |
Today, relationships between related companies represent 68% of international transactions, and this is why tax authorities logically focus their attention on these transactions.
In France, transfer pricing regulations were strengthened in 2010, further to the incorporation into French law of the provisions of the 2006 EU Code of Conduct concerning transfer pricing. Until December 31 2009, French companies which were subject to a tax audit were required to be able to justify, through any means, that intercompany transactions were arm's length.
For financial years beginning from January 1 2010, large French companies are required to maintain and produce documentation supporting the arm's length nature of transfer prices. Said documentation must be permanently available and regularly updated.
The new legislation applies to entities subject to French corporate income tax, whose turnover or assets amount to at least €400 million ($576...
This article is available to subscribers of International Tax Review only. Please log in to read the rest of this article.
If you would like to gain access to additional related content, please upgrade your current subscription
Subscribe now
This article is available to subscribers only. To read the rest of this article please subscrbe.
Subscribe