Transfer pricing - New obligations in France in 2017

Transfer pricing - News

In the context of targets made known by the current Government against tax fraud and for increasing business transparency, the so-called “Sapin II” Law, dated 9th December 2016 on transparency, combating corruption and modernising economic activities, introduced significant new tax obligations with regard to transfer pricing.

Up until now, only companies subject to the obligation to present a full TP- documentation relating to their transfer pricing, i.e. those entities:  

  • with either a turnover or gross assets in excess of €400M;
  • owning companies, whether directly or indirectly, exceeding such threshold; or
  • owned by a company, whether directly or indirectly, exceeding such threshold,

had to provide the tax authorities with a simplified declaration of their transfer pricing (using the special 2257-SD tax form) within six months as of the deadline for filing their trading year results.

According to revised Article 223, sub-paragraph 5B, of the French General Tax Code [Code Général des Impôts (CGI)], henceforth obliged to fill out the simplified transfer pricing declaration for each financial year ending as of 31st December 2016, are those legal persons established in France:

  • whose annual turnover before tax, or gross assets in the trading year statements, are equal to or exceed €50M (instead of €400 M previously);
  • owning companies, whether directly or indirectly, exceeding such threshold; or
  • owned by companies, whether directly or indirectly, exceeding such threshold.

The clear purpose of this threshold-lowering measure is
to enable the tax authorities
to subject a greater number of companies to increased tax control of their transfer pricing

According to the information supplied by the French Tax General Department [Direction Générale du Trésor] in its comments on the Sapin II Law, an additional 6228 entities shall be obliged to declare their transfer pricing to the tax authorities at the latest on 3rd November 2017 using the simplified means of declaration.  These figures thus clearly illustrate that the Tax Department is already able to identify companies with transfer-pricing issues. 

Such being the case, a greater number of French SMEs with transfer pricing issues shall be obliged to fill out this simplified declaration, even though they are not obliged to compile a complete documentation with a Master File and a Local File. 

Moreover, the tax authorities may - for all companies, regardless of the turnover or of the gross assets - in the event of presumption of profit shifting to a foreign country (Article 57 of the French General Tax Code [CGI]), request the following information with regard to one or several of the given transactions:

  • the type of relations entertained between the controlled entity and one or several businesses operated outside of France;
  • the method for determining the price of the industrial, commercial or financial transactions with such businesses and all proof thereof, as well as, where applicable, any compensation granted;
  • the business activities and duties carried out by the entities;
  • the tax processing specific to transactions evaluated in a foreign country.

Hence, for companies only subject to the simplified declaration obligation, coherence between the declaration and the information supplied to the authorities in the case of control shall be decisive.

For companies subject to both the full TP-documentation and the simplified declaration obligations, coherence between the data in the master file/Local file and that of the simplified declaration is of capital importance.  Indeed, in the case of incoherence, there would exist, in our opinion, presumption of profit shifting to a foreign country.  


Below is a summary of the current French obligations in terms of transfer pricing:

  • €50M threshold for either the turnover or the gross assets (threshold of the French entity, of its subsidiaries, or of its parent companies) - simplified declaration no. 2257 SD and, upon prior request with due reasons from the Tax Authorities, information on the entities of the group and on the prices applied to certain transactions;  
  • €400M threshold for either the turnover or the gross assets - simplified declaration in addition to the complete TP-documentation, pursuant to the BEPS 2015 explanatory statements of the OECD;
  • For companies whose consolidated turnover exceeds €750M, the group shall be obliged to file a Country-by-Country declaration, the reporter necessarily being mentioned in the declaration of results of the French company. 

Considering the forthcoming French Presidential elections (May 2017), new measures in this field are expected for end 2017.  It is quite probable that France may quickly decide to lower the €400M threshold to €100M in terms of the obligation to present a comprehensive documentation.

Should you have any queries on the matter, please refer to your RSM partner, who will be able to put you in touch with the relevant RSM staff in France.  

RSM France – Transfer Pricing Team

Cécile GUYOT

Tax and Commercial Law

[email protected]