The Administrative Courts of Appeal of France recently issued decisions affirming transfer pricing adjustments which are as follows:
Lyon court of appeals
The Administrative Appeals court in Lyon concluded that Frenchco exercised direction and control over Swissco, and that Swissco was economically dependent on Frenchco. Therefore the court concluded that the transfer pricing provisions of the French tax code were properly applied to the transactions between Frenchco and Swissco, where the issue was, whether the French manufacturing entity (Frenchco) and the Swiss distributor (Swissco) were economically dependent and, thus, whether transactions between them were subject to the transfer pricing rules of section 57 of the French general tax code (Code général des impôts).
Nantes court of appeals
The Nantes appellate court restated that, under the transfer pricing rules of section 57, once the French tax authorities establish there is a difference in pricing for transactions between the taxpayer and related entities and between the taxpayer and unrelated third parties
The appellate court found that the French taxpayer had failed to satisfy its burden of proof, and thus affirmed the transfer pricing adjustments.
