France Issues New Transfer Pricing Rules For 2014
France’s 2014 Finance Act (No 2013-1278) requires that the additional amount of tax assessed by the tax authority upon the launch of a Mutual Agreement Procedure (MAP) must be paid in advance of an outcome.
This measure was introduced by repealing Article L. 189 of the Tax Procedures Code (LPF), with effect for all MAPs launched from January 1, 2014. In addition, large taxpayers will be required to disclose their management accounting information, their consolidated accounts, and any overseas tax rulings, including Advance Pricing Agreements (APAs).
This requirement to disclose foreign rulings is applicable only to companies that fall under Article L.13 AA of the LPF; that is those companies whose assets or yearly turnover exceed EUR400m. As regards the other new disclosure requirements, lower thresholds apply. These thresholds are EUR400m for assets, a turnover threshold of EUR152.4m for sellers of goods, and a turnover threshold of EUR76.2m for all other businesses. The disclosure requirements are triggered when a business exceeds any of these thresholds.
Two additional measures had been adopted by lawmakers, but were deemed to be unconstitutional before coming into force. These included a new penalty for transfer pricing-related deficiencies, at 0.5 percent of gross turnover (instead of the current 5 percent of underpaid tax,) and a shift in the burden of proof onto the taxpayer in cases of major business restructuring.
Credit: Tax News