France: Nestlé case
International Tax Review is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024

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

Australian businessman Gordon Merchant used EY’s advice to offset an A$85 million capital gain, according to the Federal Court
Griggs has been drafted in ahead of schedule as the incumbent Tim Ryan departs for Citigroup; while the Netherlands plans to scrap a 15% share buyback tax
Authorities must ensure that Russian firms do not use transfer pricing schemes to increase profits made from oil sold in different markets, advocacy organisations have argued
Fallet, a partner at law firm Mauger Muniz Advogados in Brazil, tells ITR about his passion for tax law, the leaders who inspired him, and what makes tax cool
The former chief operating officer will assume the role on July 1
Ahead of next week's Indirect Tax Forum in London, ITR spoke with Christian Van Der Valk of Sovos about how different governments and companies are embracing e-invoicing
Konrad Jeczewski has alleged he was threatened with negative reviews before being made redundant by EY Australia
The suggestion was welcomed by Skadden’s European tax head at a special event on space and tax
A majority of clients – particularly high-earning businesses – want advisers with demonstrable social credentials, according to a survey of more than 28,000 corporate counsel
The training comes at a ‘critical time’ in the fight against tax criminals; in other news, Spanish prosecutors have dropped a tax fraud case against Shakira
Gift this article