International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

France: Nestlé case

jouffroy.jpg
cotte.jpg

Renaud Jouffroy

Fabien Cotte

It is still uncertain whether a cross border transfer of a cash pooling activity within a group may constitute an indirect transfer of profit. In 2011, the Paris Administrative Court ruled that the transfer of a cash pooling activity without compensation from a French company to another member of the group located in a foreign jurisdiction (Switzerland) qualifies as an indirect transfer of profits. Therefore, the tax authorities have been entitled to reassess Nestlé up to the value of the activity transferred, retaining a profit margin of 0.5%, which according to the tax authorities corresponded to the usual profit margin applied by various multinational companies for such an activity.

The Court of Appeal of Paris reversed the decision of the Paris Administrative Court, but only to the extent that the tax authorities cannot justify the 0.5% rate, in particular in the light of the activity performed, guarantees granted by the debtors and their risk profiles.

The Court of Appeal did not rule whether such a transfer of a cash pooling activity within a group may constitute, in itself, an indirect transfer of profit on the transfer of a valuable intangible. On this basis, and pending the Supreme Court decision, the transfer of any functions or activities (including non-operational intra-group ones) outside France should still be carefully monitored.

Renaud Jouffroy (renaud.jouffroy@fr.landwellglobal.com)

Tel: +33 (0) 1 56 57 42 29
Fabien Cotte (fabien.cotte@fr.landwellglobal.com)

Tel: +33 (0) 1 56 57 47 72

Landwell & Associés, Paris

Website: www.landwell.fr

more across site & bottom lb ros

More from across our site

The BEPS Monitoring Group has found a rare point of agreement with business bodies advocating an EU-wide one-stop-shop for compliance under BEFIT.
Former PwC partner Peter-John Collins has been banned from serving as a tax agent in Australia, while Brazil reports its best-ever year of tax collection on record.
Industry groups are concerned about the shift away from the ALP towards formulary apportionment as part of a common consolidated corporate tax base across the EU.
The former tax official in Italy will take up her post in April.
With marked economic disruption matched by a frenetic rate of regulatory upheaval, ITR partnered with Asia’s leading legal minds to navigate the continent’s growing complexity.
Lawmakers seem more reticent than ever to make ambitious tax proposals since the disastrous ‘mini-budget’ last September, but the country needs serious change.
The panel, the only one dedicated to tax at the World Economic Forum, comprised government ministers and other officials.
Colombian Finance Minister José Antonio Ocampo announced preparations for a Latin American tax summit, while the potentially ‘dangerous’ Inflation Reduction Act has come under fire.
The OECD’s two-pillar solution may increase global tax revenue gains by more than $200 billion a year, but pillar one is the key to such gains due to its fundamental changes to taxing rights.
The solution to address the tax challenges arising from digitalisation and globalisation will generate more revenue than previously estimated.