Retour Actualités | Publié le 15/02/16

Tax Alert - Transfer Pricing Compliance

Tax Alert - Transfer Pricing Compliance

 

Article L13AA of the Tax Procedural Code (hereafter « TPC ») states that companies which :

  • Are apart of a group comprised of entities with an annual turnover or a gross asset on or above 400 Million Euros ;
  • Own at year end, directly or indirectly, more than half of the capital or the voting rights of an entity – legal person, organization, trust or similar institution  established or constituted in France or out of France – satisfying to the above mentioned conditions ;
  • Have more than half of the capital or voting rights detained, at year end, directly or indirectly by an entity satisfying to the above mentioned conditions;

...Must have at the disposal of the Tax Administration a documentation to justify the Transfer Pricing policy of the company.

This documentation must detail the method used to determine the amount of re-billing in the group and in respect to the arm’s length principle.
In order to do so, the documentation must be prepared at several levels :

  • The light questionnaire ;
  • The Master file ;
  • The local/country file ;
  • A country by country reporting.

 

THE CONTENT OF THE DOCUMENTATION

The light questionnaire
The transfer pricing questionnaire is a short document to be completed starting year ending from December 8, 2013. It summarizes the intra-group operations by “nature of transactions” amounting to at least 100 000 Euros.
The form (CERFA n°2257-SD) must be filed with the Tax Authorities through a dematerialized process within 6 months of the deadline of filing of the income statement.
Practically, the form was included in the annual corporate return so that it would be generated and automatically filed along with it.
 
The following companies are exempted from filing the light questionnaire :

  • Companies which don't undertake transactions with foreign related entities ;
  • Companies undertaking transactions with foreign related party for an amount lesser 100 000 Euros by "nature of transactions".

 

The Master file
The Master file is prepared at the level of the mother company of the group. It is a document providing an overview of the group and of the different activities of its entities.
It has to be spontaneously given to the tax inspector at the beginning of the tax audit.

 

The country/local file
The country file is a document describing the activity of the concerned entity in the given country, rebilling operated and the chosen method of transfer pricing.
It has to be spontaneously given to the tax inspector at the beginning of the tax audit.

 

Reporting country by country
The Financial Law for 2016 has introduced the obligation of the filing of a reporting country by country for big integrated groups with an annual turnover of more than 750 Million Euros.

Also for financial years beginning January 1st, 2016, companies must establish a declaration country by country stating :

  • Group profits ;
  • Economic, account and tax aggregates ;
  • Information about the location and the activity of the entities of the group. 

The declaration has to be submitted within 12 months of the year end and must be filed online.
It is to be used for automatic exchange of information between countries. 
 

Penalties
Failure to comply with the mandatory filing of the light questionnaire (CERFA n°2257-SD) will result in the application of a 150 Euros penalty.

Penalties applicable for failure to prepare the principal documents (Master file, country file) are :

  • 10 000 Euros ;
  • 5 % of the transferred profits ;
  • 0,5 % of the amount of the transactions audited.

The higher amount will be retained as the penalty.

Errors and omissions in the documents will result in the application of a 15 Euros penalty per errorgranting the total amount of penalty cannot be lower than 60 Euros or higher than 10 000 Euros.

Failure to prepare and file the country by country reporting on a timely manner will lead to the application of a penalty which cannot exceed 100 000 Euros.

 

Pour aller plus loin: 
Vous êtes...
  • STARTUP
  • PME
  • Professions libérales
  • SECTEUR NON MARCHAND
  • ENTREPRISE CULTURELLE
  • FILIALE DE Société étrangère

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