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France – Transfer Pricing (2025)

The arm’s length principle in France is incorporated into domestic law through Article 57 of the Code général des Impôts (GTC), which is the domestic equivalent of Article 9 of the OECD Model Tax Convention. There is no single, comprehensive statute listing all transfer pricing operational rules; rather, French administrative doctrine (Bulletin Officiel des Finances Publiques, BOFIP) sets out interpretative guidance and procedures. Key administrative references include BOI-SJ-RES-20-20120912 (12 September 2012) on APAs; BOI-INT-DG-20-40-20120912 (12 September 2012) on general transfer pricing guidance, treaty provisions and practical issues; BOI-BIC-BASE-80-20140218 (18 February 2014) on definition, calculation, documentation, control and procedure; and BOI-BIC-BASE-80-20-20150902 (2 September 2015) on indirect transfer of profits between dependent enterprises. The administrative framework is intended to cover all types of transactions between associated enterprises, including commercial, industrial and financial operations.

Arm’s length principle and role of the OECD Transfer Pricing Guidelines

The OECD Transfer Pricing Guidelines are not legally binding in France, but the administrative doctrine explicitly refers to them and prescribes their application for determining arm’s length prices and selecting appropriate methods. BOI-INT-DG-20-40 and BOI-BIC-BASE-80-20140218 specifically point to the OECD Guidelines as the reference for functional analysis, method selection and arm’s length testing. Consequently, the French tax administration applies the OECD approach in practice when assessing compliance with the arm’s length principle.

Article 57 GTC refers to dependence or control in the context of profit transfers, without exhaustively defining those concepts in statutory terms; administrative doctrine clarifies the criteria. Associated enterprises are those that depend on, or are controlled by, undertakings outside France. Dependence can be de jure or de facto. De jure dependence is established where the foreign enterprise holds a preponderant share of the French enterprise’s equity or an absolute majority of voting rights; in practice holding more than 50% of shares is sufficient to characterize dependence or control. De facto dependence may arise from contractual arrangements or the factual conditions of the relationship, for example where the foreign entity exercises decision-making functions over the French enterprise, directly or indirectly. The profile does not provide a distinct domestic procedural definition specifically for permanent establishments (PEs) and refers to doctrine and international instruments for allocation of profits to PEs.

Methods and application criteria (hierarchy if any)

French domestic law does not prescribe a statutory list of transfer pricing methods. Administrative doctrine instructs that there is no legally imposed hierarchy of methods; rather, the “most appropriate method” must be selected after carrying out a functional analysis. BOI-BIC-BASE-80-10-10-20140218 states that method choice should be based on analysis of the functions performed, assets used and risks borne, and must be the one that best determines an arm’s length price.

Comparability and ranges (comparable preferences, adjustments, ranges)

France follows the OECD guidance on comparability analysis (Chapter III of the OECD Guidelines). BOI-INT-DG-20-40 §50 emphasises the need to perform a comparability analysis to test the arm’s length nature of related-party transactions. There is no legal preference for domestic comparables over foreign ones; however, in practice domestic comparables are often regarded as better fitting due to market-specific factors, and foreign comparables are accepted when no usable national comparables exist. The tax administration does not use secret comparables. Domestic law does not mandate the use of an arm’s length range or statistical measures as a binding rule; the OECD Guidelines remain the practical reference. Comparability adjustments may be accepted where specific circumstances justify them, but they are not required by a standalone statutory provision.

Documentation and reporting (Master, Local, CbC, thresholds, language, deadlines, forms)

Transfer pricing documentation obligations are implemented through tax procedure rules and specific GTC provisions. Article L.13 AA of the Tax Procedure Code (TPC) requires entities belonging to groups with consolidated turnover or total assets of at least EUR 400 million to have available for tax authorities both a master file and a local file, consistent with Annexes I and II to Chapter V of the OECD Guidelines. Article L.13 AB of the TPC imposes additional documentation where related parties are located in non-cooperative jurisdictions, including provision of financial statements and other documents required from corporations subject to French corporate tax. Article 223 quinquies B of the GTC requires companies with turnover or total assets of at least EUR 50 million to file each year a simplified version of the master and local file. Article 223 quinquies C of the GTC faithfully implements country-by-country (CbC) reporting consistent with Annex III to Chapter V of the OECD Guidelines for MNEs exceeding the EUR 750 million consolidated threshold. Declarations must be submitted using administration-provided forms and filed electronically. The administration may request translations into French of documents prepared in another language. Stated deadlines in the profile are: for the obligation under Article 223 quinquies B the filing deadline is within 6 months after filing the corporate tax return; for CbC reports under Article 223 quinquies the deadline is within 12 months of the group’s financial year end. If the taxpayer does not produce required documentation or produces it partially, the administration issues a formal notice to produce or complete the documentation within 30 days; failure to comply may trigger penalties under the GTC and TPC.

Safe harbours / exemptions / materiality (if applicable)

France does not have general safe harbour rules in its transfer pricing regime for particular industries, taxpayer types or transaction types. The domestic law provides exemptions from documentation obligations only as a consequence of the monetary thresholds described above (EUR 400 million, EUR 50 million, EUR 750 million). The tax administration has issued guidance and simplification measures for SMEs, including a transfer pricing guide adapted to SME needs and simplified APA procedures for SMEs.

APAs and MAP; procedures and timing if stated

France offers preventive and dispute resolution mechanisms: rulings, enhanced engagement programmes, and Advance Pricing Agreements (APAs) — unilateral, bilateral and multilateral — are available. Mutual Agreement Procedures (MAP) are used and France applies arbitration where bilateral treaties contain arbitration clauses; the profile indicates that arbitration is available with partner jurisdictions that included arbitration clauses in their MLI reservations (27 countries are referenced). The profile refers practitioners to the OECD MAP Portal and the French administrative APA doctrine for further details. Specific statutory timelines for APAs and MAP resolution are not detailed in the profile beyond the reference to the availability of arbitration with certain treaty partners.

Penalties and other considerations (secondary adjustments, re-characterisation, year-end adjustments, PEs)

Sanctions for documentation failures include fines and penalties specified in the GTC. Article 1735 ter of the GTC provides a penalty that cannot be less than EUR 10 000 and can reach 0.5% of the amount of the transactions covered by documents not presented, or up to 5% of reassessed profits. Article 1735 of the GTC provides for a EUR 10 000 annual fine where a taxpayer does not comply with Article L.13 B TPC requirements. For the simplified filing under Article 223 quinquies B the common penalty mechanism applies (Article 1729 B of the GTC), consisting of a EUR 150 fine. For CbC reporting the penalty under Article 1729 F of the GTC cannot exceed EUR 100 000. Year-end adjustments are considered permissible as a way to reach an arm’s length price, within the limits imposed by statute of limitations; there is no general statutory provision expressly governing year-end adjustments, but they may be accepted in practice in particular circumstances (e.g. change in economic conditions or correction of accounting errors). France implements secondary adjustments when doctrinal conditions are met; BOI-INT-DG-20-30-10-20170201 §630 explains that when an adjustment by the tax authorities is considered a deemed distribution a withholding tax may be applied at the treaty rate, although this withholding will not be enforced if the company repatriates the sums considered to constitute profit transfer within 90 days of notification of the proposal.

Permanent establishments and attribution of profits

France has not formally adopted the Authorised OECD Approaches (AOA) as a general treaty position, but it has applied the AOA methodology in practice to resolve MAP cases for fiscal years post-2010, notably in banking sector disputes concerning capital allocation. The profile indicates that France has used the AOA in practice for certain MAP resolutions, but has not adopted it universally across tax treaties.

Other relevant information

The profile highlights that for detailed procedural information on MAP and APAs practitioners should consult the OECD MAP Portal and the French MAP profile. The administration provides sectoral and SME-targeted guidance, but the profile does not set out commodity-specific rules or a specific domestic regime for hard-to-value intangibles; therefore, where the profile lacks domestic guidance the OECD Guidelines remain the operative reference. No additional new transfer pricing regulations are reported in the profile.

Conclusion

French transfer pricing practice is governed by Article 57 GTC and by extensive administrative doctrine that consistently refers to the OECD Transfer Pricing Guidelines. The legal framework does not centrally codify a list of methods or a formal hierarchy, instead applying the “most appropriate method” after a functional analysis. Documentation obligations are detailed and threshold-driven, with significant penalties for non-compliance, while dispute prevention and resolution measures (APAs, MAP, arbitration in treaty contexts) are available. Specific regimes for commodities, HTVIs or generic safe harbours are not provided in the domestic profile and reliance on OECD guidance and administrative doctrine is therefore necessary for the practical application in those areas.

References

More information and country profiles: https://www.oecd.org/en/topics/sub-issues/transfer-pricing/transfer-pricing-country-profiles.html

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