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Transfer Pricing in France
France applies transfer pricing rules through Article 57 of the Code Général des Impôts (CGI), which permits the French tax authorities (DGFIP) to reassess profits transferred indirectly to related entities outside France. Article 57 establishes a rebuttable presumption of profit transfer when the French entity transacts with entities in low-tax jurisdictions — shifting the burden of proof to the taxpayer. France follows OECD Transfer Pricing Guidelines and applies the standard interquartile range (25th–75th percentile). The French administrative guidelines (Bulletin Officiel des Finances Publiques — BOFiP) provide detailed interpretation of the arm's length principle in the French context.
French TP documentation requirements are codified in Articles L13 AA and L13 AB of the Livre des Procédures Fiscales (LPF). Documentation is mandatory for companies meeting specific size thresholds — annual turnover or gross assets exceeding €400 million, or subsidiaries/parents of companies meeting this threshold. Documentation must include a Master File (fichier principal) and a Local File (fichier local) following OECD Chapter V. The documentation must be available at the commencement of a tax audit and must be provided within 30 days of an audit request. Country-by-Country Reporting is required for French-parented groups with consolidated revenue exceeding €750 million.
France is known for aggressive transfer pricing enforcement. The DGFIP has dedicated TP audit teams (Brigade de Vérification des Prix de Transfert — BVPT) that focus exclusively on multinational TP issues. Common audit targets include: French manufacturing entities earning below-market margins, French distributors with thin margins on intercompany purchases, management fee charges from foreign head offices, and IP royalty payments to group entities in favourable jurisdictions. France has actively pursued mutual agreement procedures (MAPs) and APAs — particularly bilateral APAs with Germany, the UK, and the US — as mechanisms for resolving TP disputes and providing advance certainty.
France TP Quick Reference
Common TP Audit Triggers in France
French entity margins below industry benchmarks
Significant IP royalty or management fee payments to foreign entities
CbCR data showing low French profitability relative to substance
Business restructurings transferring functions out of France
Transactions with entities in low-tax jurisdictions (Article 57 presumption)
Large intercompany loan balances with interest deductions
France vs. OECD Guidelines: Key Differences
France follows OECD IQR (25th–75th). Key differences: (1) Article 57 presumption for low-tax jurisdiction transactions (burden of proof reversal); (2) €400M turnover/asset threshold for documentation; (3) dedicated TP audit teams (BVPT); (4) 0.5% penalty on reassessed income (minimum €10,000); (5) active bilateral APA programme.