- Provision to the French tax authorities of certain decisions or rulings obtained by associated enterprises from foreign tax administrations (art. 98 of the 2014 Finance Act)
Information in the French transfer pricing documentation should now include “all decisions of the same nature as interpretations, guidelines and circulars mentioned in article L. 80 A [of the French Tax Procedure Book, “FTPB”], given by foreign authorities to any associated enterprise.”
While the legislator expressed in parliamentary debates that the intent of this provision is a disclosure of rulings obtained by foreign associated enterprises in relation to their own situation, the final text refers to article L. 80 A of the FTPB (relating to guidelines, official positions of the tax administration…) and not to article L. 80 B (which relates to taxpayer-specific rulings). This reference casts doubt on the exact nature of decisions to be communicated. The scope of the obligation is also uncertain as the text does not limit the disclosure requirement to “rulings” having an impact on or direct relation with the French taxpayer.
In the absence of specific indications, this new requirement applies as from 1st January, 2014. It is unclear whether it will apply to transfer pricing documentation to be provided as from 1st January, 2014 or to “rulings” obtained or related to transactions performed after that date. If the former case applies, this would mean that it would apply to documentation to be provided in the context of tax audits performed in 2014 related to previous fiscal years.
- Obligation to transmit to the tax administration "light" transfer pricing documentation
The law on tax evasion and serious economic and financial crime, which entered into force on 8th December, 2013, created an obligation to transmit to the tax administration "light" transfer pricing documentation, distinct from the existing documentation requirement under article L. 13 AA of the FTPB. The new obligation applies to legal entities established in France which are within the scope of article L. 13 AA of the FTPB (i.e. company with revenue or total balance sheet exceeding € 400,000,000 or which are owned by or own more than 50% of a company meeting one of these criteria).
The "light" documentation should cover transactions whose aggregated amount by type of transactions exceeds €100,000. Information to be provided includes a general description of the activity of the group and of the entity, a list of main intangibles in relation to the entity, a general description of the group transfer pricing policy, list and amount of transactions with associated enterprises, as well as a presentation of transfer pricing method(s) applied. The contents are very similar to the ones of the whole transfer pricing documentation report, except for benchmarks which are not required.
The "light" documentation should be provided to the tax administration within six months of the due date for filing the income tax return, i.e. generally within three months after the end of the fiscal year. This new requirement applies to documents to be filed within six months following the income tax return date which expires as from 8th December, 2013. In practice, for financial years closed on 31st December, 2013, the "light" documentation will have to be filed on 5th November, 2014 at the latest. In the absence of any specific penalty attached to this new text, failure to comply will entail the application of general penalties of €150 for late filing and €15 per omission or inaccuracy up to a maximum of €10,000.