In France, transfer pricing rules comply with the arm’s length principle, and OECD guidelines are consulted by the French tax authorities (FTA). No contemporaneous documentation is required in France. However, during a tax audit very short deadlines are imposed to answer the FTAs often very detailed transfer pricing questions.
Therefore, it is highly advisable to have proper documentation ready for presentation to the tax inspectors.
Recent regulatory developments and enforcement activity have also emphasised the FTA’s interest in transfer pricing issues. French tax regulations provide for bilateral and unilateral APA procedures. Multilateral APAs are also available, but only with states that have signed a tax treaty with France in line with the OECD model tax treaty. In addition, in 2006, an APA procedure requesting simplified documentation became available for SMEs. Currently, approximately 30 APA procedures are in review by the FTA concerning all sectors of activity (most are bilateral, but there are also some multilateral and unilateral).
Approximately 250 MAP cases are currently under review by the FTA, of which 100 concern transfer pricing. A MAP now suspends the collection of taxes in France.
