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France: Reduction of the documentation threshold


Published on March 2, 2017
The transfer pricing documentation obligation is extended in France as from December 31st, 2016. The documentation threshold for simplified documentation obligation is indeed reduced from MEUR 400 to MEUR 50 of turnover or gross assets.
Since FY 2014, French large companies have to submit a simplified transfer pricing documentation on an annual basis (article 223 quinquies B of the French Tax Code). As from FY ending December 31st, 2016, this obligation is extended to French companies with annual turnover or gross assets above MEUR 50.
The simplified documentation obligation is mandatory if one of the company of the group (i.e. the French company but also any other company of the group, parent companies, subsidiaries, etc.) exceeds the reduced threshold of MEUR 50 turnover or gross assets.
From a practical point of view, French companies subject to the said obligation have to file a specific form (form 2257-SD). This form must be filed electronically on an annual basis within 6 months of the filing of the tax return. The simplified transfer pricing documentation to be submitted contains general information on the group (description of the activity, list of main intangible assets, State of establishment of the owner of the latest, etc.) and specific information about the French company (intragroup transactions over a threshold of EUR 100.000, transfer pricing method applied, etc.)
The simplified documentation obligation is now disconnected from the transfer pricing documentation for which the threshold of application remains MEUR 400 of turnover or gross assets. This also means that some French companies will be subject to the simplified documentation obligation without being subject to the transfer pricing documentation itself. These companies should however be in a position to justify, in case of tax audit, the information provided annually on the form 2257-SD.

To sum up, there are still 3 levels of transfer pricing documentation obligation in France:

  1. The simplified transfer pricing documentation obligation

    As explained above, French companies are subject to this obligation when one of the companies of the group has a turnover or total assets of more than MEUR 50.

  2. The transfer pricing documentation
    In case of a tax audit, French companies have to provide the French Tax Authorities with a complete transfer pricing documentation according to article L 13 AA of the French Tax Procedure Code. Only French large companies are subject to this obligation, i.e. if the French company itself or any company of the group (parent companies, subsidiaries, etc.) has a turnover or gross assets of more than MEUR 400.
  3. The country-by-country reporting (CbCR)
    This new obligation has been implemented in France for companies that prepare consolidated accounts and with annual consolidated turnover equal to or higher than MEUR 750. This obligation has in principle to be fulfilled by the mother company of the group. A French subsidiary could however be subject to the CbCR obligation if no other company of the group is fulfilling the obligation in its own country notably.

From a practical point of view, the first CbCR will have to be submitted in France by the end of 2017. French companies that belong to a multinational group subject to the CbCR obligation will also have to directly indicate in its tax return which company of the multinational group will file the CbCR (either the French company or another company of the group). As a consequence, for FY ending December 31st, 2016, multinational groups should decide which entity of the group is chosen to file the CbCR until May 2017 (date of filing of the tax return in France).


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