The Finance Act for 2015 and the Amending Finance act for 2014 bring new transfer pricing items.

Besides, end of 2014 is the starting point of the new transfer pricing documentation filing requirement.

Increased penalty for insufficient transfer pricing documentation

  • The upper limit of the payable penalty in case of insufficient transfer pricing documentation is increased. The minimum penalty remains fixed at € 10,000 per audited year but can reach the higher of the following amounts :
  1. 0.5% of amount of transactions concerned by missing documentation.
  2. 5% of tax reassessment.

This penalty applies to tax audits for which audit notice is sent as from January 1st 2015 on.

Cancellation of withholding tax in case of tax reassessment repatriation

  • regularisation process is opened to companies that have been subject to a tax audit, leading to transfer pricing reassessment or tax reassessment linked to payments to countries with a preferential tax regime. As adjustments are analysed as deemed distributed dividends to a related company, the taxpayer can avoid paying the withholding tax subject to the fact that:
  1. tax reassessment and penalties are accepted by the taxpayer and,
  2. an amount equal to corporate tax adjustments is repatriated to the taxpayer within 2 months.

New transfer pricing documentation filing requirement

  • Companies already subject to transfer pricing documentation requirement have to file a form that includes in particular main intra-group flows and corresponding transfer pricing policies. The new obligation that is applicable since 2014 has been actually put in place during the last quarter of 2014 and it goes on as follows, in 2015.

The penalty for failing to file is non-meaningful (€ 150 and € 15 per omission/inaccuracy).

It is however likely that missing form shall generate a larger visibility of groups in the framework of tax audit programing by French tax authorities.