The Law against tax fraud and economic financial crime introduced a new set of transfer pricing documentation filing obligations applicable to any company within the scope of the transfer pricing documentation requirements pursuant to Article L13AA of the French Tax Procedures Code.
The new disclosure requirement applies to French entities with turnover or gross assets on the balance sheet exceeding EUR400 million, or with a more than 50% direct or indirect shareholder or subsidiary meeting this threshold.
The FTA released on September 16th, 2014 form n°2257 (and corresponding guidelines) to be used by the taxpayers to comply with the new obligation.
The form must be submitted no later than six months after the deadline to file the annual corporate income tax return to the tax authorities. An exception exists for companies closing at December 31, 2013 as they are allowed to submit the form until November 20, 2014.
Form n°2257 is in French and consists of a table to be completed per French legal entity in the scope of the obligation. The following information has to be provided:
- General information on the group:
- A general description of the Group activity, the nature and the country of location of the Group intangibles used by the French entity
- A broad description of the Group transfer pricing policies that are related to intercompany transactions involving the French entity
- Specific information on the French company:
- The aggregated amounts of intercompany transactions by nature (sales, services provided, commissions received, purchases, services purchased, commissions paid, etc.). A single amount should be mentioned for each type of transaction (i.e. the detail by type of products / services or by counterparty is not required).
- Only the transactions for which the total aggregated amount by nature exceeds €100.000 shall be documented
- For each kind of transaction, the company shall provide:
- The countries of origin of the related companies involved in the transaction
- The main transfer pricing method used for the calculation of the transfer pricing. Only the “other methods” shall be broadly described
- A broad description of the company’s activity and the changes that occurred during the tax year in relation to the transfer pricing policy, the nature and the country of location of the assets (if any) shall be provided
The law does not provide for specific penalty for lack of filing. This is likely to trigger in practice a tax audit, where the complete documentation is likely to be requested; if the complete documentation is then not produced, a maximum penalty of 5% of the assessed amount would apply and there would also be a risk of arbitrary reassessments.
It is therefore strongly advisable to meet the deadline for filing the light transfer pricing documentation.