New transfer pricing rules in France | KPMG | BE

France: Transfer pricing measures are enacted

Transfer pricing rules enacted in France

The Finance Act for 2015 and the Second Amended Finance Act for 2014, as published in the French official journal on 30 December 2014, include provisions concerning transfer pricing.


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Transfer pricing documentation: penalties

The newly defined penalty for a failure to produce transfer pricing documentation is, for each audited year, to the greater of:

  • €10,000
  • 0.5% of the amount of the transactions for which documentation has not been provided to the French tax authorities after a formal request
  • 5% of the additional tax assessments based on Article 57 of the French tax code relating to transactions for which documentation has not been provided to the French tax authorities after a formal request

This new penalty is effective with respect to tax audits for which an audit notice was sent by the French tax authorities on or after 1 January 2015.

KPMG observation

Tax professionals with Fidal* have observed that while the term the “amount of the transactions” is unclear and may need to be more precisely defined, this new provision is likely to increase the penalties connected to transfer pricing documentation, making it all the more important for taxpayers to carefully prepare such documentation.

Regularization procedure

The Second Amended Finance Act for 2014 includes a “regularization” procedure that can be implemented during the course of a tax audit.

The regularization procedure allows the French tax authorities to exempt from the 30% withholding tax for “deemed dividends” the following: (1) profits considered as “illegally transferred” under the transfer pricing regulations; or (2) payments made to recipients located in “tax haven” jurisdictions that can be characterized as distributed income within the meaning of Article 119 bis 2 of the French tax code.

The procedure is subject to certain conditions. In particular, the audited company must accept the reassessments and penalties proposed by the tax authorities before receipt of the tax collection notice.

This provision was effective 31 December 2014.

KPMG observation

This new procedure may result in significant decreases in the cost of tax audits focused on transfer pricing issues.


For more information, contact a tax professional with KPMG’s French Tax Center in New York or with Fidal* in Paris:


Gilles Galinier-Warrain | French Tax Center, KPMG LLP, New York | +1 212-954-8605 

Olivier Kiet | + 33 1 55 68 16 15

Pascal Luquet | + 33 1 55 68 15 22

Kate Noakes | + 33 1 55 68 16 57

François Vincent | + 33 1 55 68 14 92


*Fidal is a French law firm that is independent from KPMG and its member firms.

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