A report published by the Inspectorate General for Finance (IGF) on 6 June indicates that France is looking to review transfer pricing aspects of its tax code in order to better impose the arm’s-length principle.
The French sanctions and enforcement provisions are also under review, as the inspectors found that transfer pricing penalty practices have been inefficient. Since 2010, firms with income above 400 million Euros and firms who hold at least 50% of a subsidiary with an income of the same amount are required to keep transfer pricing documentation. The penalties apply to any company that fails to provide the documentation in full; however, if either no transfer pricing adjustment is made or an adjustment is reversed, the taxpayer is no longer subject to a sanction.
