Transfer Pricing 2026 Comparisons

Legal Basis

Transfer pricing in France is governed by Article 57 of the French Tax Code (CGI, Code général des impôts). This provision allows the French Tax Authorities (FTA) to reintegrate into the taxable income of a French entity any profits that have been directly or indirectly transferred to foreign related parties through non-arm’s length conditions.

Article 57 of the CGI applies where a French enterprise:

• controls a foreign enterprise;
• is controlled by a foreign enterprise; or
• is under common control with a foreign enterprise (see 2.1 Application of Transfer Pricing Rules for the definition of “control”).

This provision targets all forms of profit shifting, including those arising from pricing policies, financial arrangements, or contractual terms.

The transfer pricing regime is supplemented by specific provisions of the French Tax Procedures Code (FTPC, Livre des procédures fiscales or LPF) relating to transfer pricing documentation obligations (see 8.2 Transfer Pricing Documentation for documentation requirements).

Administrative Doctrine (Bulletin Officiel des Finances Publiques – BOFiP)

The French administrative doctrine includes in particular the following guidance.

• BOI-BIC-BASE-80-10 – general transfer pricing principles.
• BOI-BIC-BASE-80-10-10 – arm’s length principle and comparability analysis.
• BOI-BIC-BASE-80-10-20 – transfer pricing audits.
• BOI-BIC-BASE-80-10-30 and BOI-BIC-BASE-80-10-40 – transfer pricing documentation requirements (see 8.2 Transfer Pricing Documentation).

These guidelines provide interpretative guidance that is systematically relied upon by the FTA during tax audits.

The OECD Transfer Pricing Guidelines are not legally binding under French law. However, they are consistently relied upon by the tax authorities, the administrative doctrine, and French courts. The OECD Guidelines are also expressly referenced in Double Tax Treaties.

The French transfer pricing legislation dates back to 1933. Although its wording has remained substantially unchanged, its interpretation has evolved over time through administrative guidance and case law.

The French transfer pricing framework has been progressively strengthened through mandatory documentation requirements (see 8.2 Transfer Pricing Documentation) and increased scrutiny during tax audits.

• The formal requirement to maintain transfer pricing documentation was first introduced for financial years starting on or after 1 January 2009.
• The scope and content of the documentation requirements evolved as from 1 January 2018 and have since been fully aligned with the OECD-recommended format (Master File and Local File). The current French documentation requirements do not deviate from the standard structure set out in Chapter V of the OECD Transfer Pricing Guidelines.

Significant recent changes were introduced by the Finance Law for 2024, further reinforcing the binding nature of transfer pricing documentation and strengthening alignment with the OECD approach on Hard-to-Value Intangibles (HTVI). These measures apply to fiscal years starting on or after 1 January 2024 and include the following.

• A reduction in the transfer pricing documentation thresholds, from EUR400 million to EUR150 million of turnover or gross assets (as determined under statutory accounts).
• The opposability of transfer pricing documentation – where the content of the documentation deviates from the taxpayer’s actual transfer pricing policies or results, the documentation may be used against the taxpayer and treated as a presumption of profit shifting within the meaning of Article 57 of the French Tax Code, unless the taxpayer can demonstrate otherwise.
• An increase in the minimum penalties for missing or incomplete transfer pricing documentation, from EUR10,000 to EUR50,000 per fiscal year.
• The introduction of specific provisions aligned with the OECD approach to Hard-to-Value Intangibles (HTVI), under which:
1. the French Tax Authorities may rely on ex-post outcomes to reassess the valuation of an intangible;
2. the statute of limitations is extended to six years (Article L169 of the French Tax Procedure Code, as amended); and
3. procedural safeguards applicable to standard tax audits (such as limitations on repeat audits) do not apply.

Article 57 of the French General Tax Code (CGI) applies to transactions between a French entity and a foreign entity where a relationship of dependence or control exists.

This provision covers situations in which:

• a French entity controls a foreign entity;
• a foreign entity controls a French entity; or
• both entities are under common control.

Control may arise in the following situations.

• Legal ownership – where one entity directly or indirectly holds more than half of the share capital or voting rights of another entity.
• De facto control – characterised by circumstances in which strategic, financial, or operational decisions are effectively dictated by another entity, or where the overall conduct of the business reflects a situation of subordination.

By exception, where a French entity enters into transactions with an entity established in a jurisdiction benefiting from a privileged tax regime (within the meaning of Article 238 A of the CGI) or in a non-cooperative territory, the existence of a control relationship does not need to be demonstrated.

The methods accepted in France correspond to those recognised by the OECD Guidelines and are explicitly referenced in administrative guidance. These include the comparable uncontrolled price method (CUP), resale price method (RPM), cost-plus method (CPM), transactional net margin method (TNMM), and transactional profit split method (PSM).

In practice, the French Tax Authorities frequently rely on the TNMM, particularly when characterising French entities as performing deemed non-complex activities, such as distribution, manufacturing, or service provision.

In theory, taxpayers may rely on alternative methods where traditional OECD methods are not appropriate. The acceptance of such alternative methods depends on the taxpayer’s ability to demonstrate that the method reflects the economic reality of the transaction, is supported by a robust functional analysis, and produces an arm’s length outcome.

In practice, however, methods other than those recognised by the OECD are rarely relied upon by taxpayers. This is because such methods are generally less accepted by the FTA during audits and are not supported by French case law, which predominantly refers to OECD-consistent approaches.

French transfer pricing rules do not establish a formal hierarchy of methods and instead follow the OECD’s “most appropriate method” approach.

However, it should be noted that recent case law has given priority to the CUP method, particularly where reliable internal comparables are available (see 14.2 Significant Court Rulings).

French administrative guidance recognises that transfer pricing analyses generally result in a range of values derived from comparable transactions or companies, most commonly referred to as the interquartile range.

In practice, the French Tax Authorities often rely on the median value of this range as the arm’s length result, particularly where the taxpayer does not justify the selection of a specific position within the range.

French case law has further clarified this approach.

• The reference to the median value may be appropriate, depending on the circumstances (Conseil d’État, 6 June 2018, No 409645, GE Healthcare).
• Where a taxpayer relies on a point within the range other than the median, it must demonstrate that this position is supported by the functional analysis and reflects the specific circumstances of the tested party. In the absence of such justification, the use of the median may be considered appropriate (CAA Paris, 22 November 2023, No 21PA06233, SASU Menarini Diagnostics France).

Aligned with the OECD Guidelines, French administrative doctrine provides that comparability adjustments should be made where material differences between the tested party and comparable companies affect the reliability of the transfer pricing analysis.

In practice, the French Tax Authorities assess whether such adjustments are economically justified, consistently applied, and supported by sufficient documentation. Adjustments addressing identified differences are, in principle, accepted where they can be reliably quantified, in line with French administrative doctrine (BOI-BIC-BASE-80-10-10).

However, in practice, these adjustments remain subject to strict scrutiny. Certain types of adjustments, such as working capital adjustments, are relatively uncommon in France. This cautious approach reflects concerns regarding the reliability of publicly available data, the sensitivity of the underlying financial assumptions, and the often-limited impact of such adjustments on the overall results. As a result, tax authorities tend to examine these adjustments closely and may challenge their application where they are not robustly supported.

Accordingly, a failure to perform necessary comparability adjustments may lead to the rejection of the benchmarking analysis. Conversely, adjustments that are inappropriate or insufficiently substantiated may equally weaken the taxpayer’s position.

In the context of financial transactions, recent case law reinforces the need for robust and well-substantiated adjustments where differences materially affect the reliability of the comparison. In particular, it confirms that taxpayers must ensure that interest rate benchmarks adequately reflect the specific characteristics of the transaction, including credit risk and prevailing economic conditions (CAA Paris, 18 December 2025, No 24PA01640).

Transactions involving intangibles are assessed in accordance with the general principles set out in Article 57 of the French Tax Code and the OECD Transfer Pricing Guidelines, as reflected in French administrative doctrine. The analysis focuses on identifying economically significant intangibles and allocating value based on the functions performed, assets used and risks assumed by each party, in particular through the DEMPE framework (Development, Enhancement, Maintenance, Protection and Exploitation).

In practice, particular attention is paid to the consistency between contractual arrangements and the parties’ actual conduct. In addition, the French Tax Authorities have increased their scrutiny of transactions involving intangibles, especially in the context of business restructurings that may involve an implicit transfer of intangible assets (such as business closures, relocation of turnover or projects, or the transfer of key personnel within a group).

As a result, taxpayers are expected to substantiate intangible-related transactions with robust benchmarking studies and detailed supporting documentation, including dedicated ad hoc reports, benchmarking analyses, and comprehensive transfer pricing documentation (Local File and Master File).

As introduced by the Finance Law for 2024, the FTA may rely on ex-post outcomes to assess whether the pricing of a HTVI transaction is consistent with the arm’s length principle. Where the difference between the valuation derived from ex-ante financial forecasts and the valuation based on ex-post actual outcomes exceeds 20%, the authorities may reassess the initial valuation, unless the taxpayer can demonstrate that the original assumptions were reasonable and based on information available at the time of the transaction.

Pursuant to Article L169 of the FTPC, the reassessment period is extended to six years, thereby increasing audit exposure for such transactions. In practice, the FTA actively applies these rules and expects taxpayers to maintain robust contemporaneous documentation, including detailed valuation models, sensitivity analyses, and clear justification of key assumptions. In the absence of such documentation, the authorities frequently rely on ex-post evidence to challenge pricing positions.

This mechanism significantly strengthens the position of the FTA in audits involving intangible assets, particularly in the context of business restructurings that entail the implicit transfer of intangibles. In addition, the implementation of DAC6 has further enhanced transparency requirements by introducing specific disclosure obligations.

Cost contribution arrangements (CCAs) are recognised under French administrative doctrine and are established in line with the OECD Guidelines.

In practice, the French Tax Authorities focus on the consistency between the participants’ contributions and their expected benefits, as well as on the allocation of risks and decision-making functions, and the economic substance of the arrangement in comparison to its contractual terms.

Particular attention is paid to situations in which a participant is allocated a share of expected returns without demonstrating corresponding contributions or effective control over the relevant risks.

CCAs are subject to increasing scrutiny, especially where they involve the development or centralisation of intangibles. In such cases, the tax authorities assess whether the arrangement effectively results in an implicit transfer of an intangible asset, which should be appropriately compensated.

In practice, insufficiently documented CCAs, or arrangements relying on simplified allocation keys, are frequently challenged. Taxpayers are therefore expected to provide detailed documentation supporting the identification of participants, the nature and valuation of contributions, and the methodology used to allocate costs and expected benefits.

French rules do not prevent taxpayers from making transfer pricing adjustments after filing their tax returns.

Transfer pricing adjustments may be made through amended tax returns and may trigger late payment interest under Article 1727 of the French Tax Code, as well as potentially give rise to penalties. The filing of amended tax returns may also attract scrutiny from the French Tax Authorities and could lead to the initiation of a tax audit.

Where a transfer pricing adjustment results in an overstatement of taxable income, the taxpayer may seek relief by filing a formal claim (réclamation contentieuse) pursuant to Article R190–1 of the French Tax Procedure Code (LPF). Such claims must be supported by robust documentation and filed within the statutory deadline, which is generally 31 December of the second year following the year of payment or assessment, in accordance with Article R196–1 of the LPF.

Where a primary adjustment is made under Article 57 of the CGI, the corresponding amount is treated as a deemed distribution. This treatment may trigger withholding tax in accordance with French domestic tax law, applicable tax treaties and/or EU directives.

French law provides for a formal mechanism that allows taxpayers to neutralise secondary withholding tax adjustments. This mechanism operates through a dedicated procedure that requires the repatriation of cash within a specific timeframe, as set out in Article L62 A of the FTPC.

In addition, transfer pricing reassessments may result in a reassessment of CVAE (contribution sur la valeur ajoutée des entreprises).

France relies on an extensive international framework for the exchange of tax information. Its double tax treaty network covers more than 160 jurisdictions and includes exchange-of-information provisions based on Article 26 of the OECD Model Tax Convention. This framework is further complemented by the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, as well as EU Directives on Administrative Cooperation (DAC), including DAC 3, DAC 6, and DAC 7.

In practice, the French Tax Authorities regularly rely on these mechanisms in transfer pricing audits to obtain information from foreign jurisdictions and to verify the consistency of multinational group positions.

Where the FTA request information from foreign tax authorities, the statutory limitation period may be extended pursuant to Article L188 A of the French Tax Procedure Code. Subject to certain conditions, the reassessment period is extended until the end of the year following the year in which the requested information is received, and in any event no later than the end of the third year following the year in which the initial limitation period expired.

According to official statistics published by the French Ministry of Economy and Finance, the FTA made several thousand international information requests each year in recent periods, including thousands of requests relating to corporate income tax matters. These figures illustrate the increasing use of cross-border administrative co-operation in the context of tax audits.

Joint audits are authorised under Article L45 of the LPF and allow the FTA to conduct co-ordinated examinations with other EU member states. Although they are still relatively limited in number, joint audits are increasingly used in complex cases, particularly involving large multinational groups. They facilitate direct exchanges between tax authorities and reduce the risk of inconsistent positions.

France participates in simultaneous controls conducted alongside other jurisdictions. Each tax authority carries out its own audit while exchanging information throughout the process.

These controls are generally co-ordinated through EU frameworks or bilateral agreements, with communication maintained via competent authority channels.

In practice, this requires taxpayers to present a consistent justification of the arm’s length nature of their transactions across all relevant jurisdictions.

France participates in the OECD International Compliance Assurance Programme (ICAP), a voluntary multilateral tax risk assessment initiative launched by the OECD in 2018. ICAP enables multinational groups to obtain a co-ordinated assessment of key tax risks – particularly transfer pricing and permanent establishment issues – from multiple participating tax administrations.

The programme is based on information provided by the taxpayer, such as country-by-country reports and transfer pricing documentation, and involves direct interaction between the taxpayer and the relevant tax authorities. France has been involved in ICAP since its initial phase and continues to participate in subsequent iterations of the programme.

In practice, ICAP is primarily used by large multinational groups and may result in an indication that certain tax positions are considered low risk, although it does not constitute a binding ruling. Participation in ICAP can facilitate dialogue with tax authorities and reduce the likelihood of subsequent audits; however, it does not preclude reassessments if new information comes to light.

France operates an advance pricing agreement programme pursuant to Article L. 80 B, 7° of the French Tax Procedures Code (FTPC), with legal protection granted under Article L. 80 A, FTPC. This programme allows taxpayers to obtain prior agreement from the French Tax Administration on the transfer pricing methodology to be applied to future intra-group transactions.

APAs may be unilateral, bilateral, or multilateral, depending on the jurisdictions involved. In practice, bilateral and multilateral APAs are generally preferred, as they offer a higher level of protection by reducing the risk of double taxation.

The programme covers a broad range of transfer pricing matters, including transactions involving goods, services, intangibles, financial arrangements, and dealings with permanent establishments. It is designed to secure the transfer pricing methodology, the selection of comparables, and the critical assumptions underlying the pricing of controlled transactions over a defined period.

Recent administrative guidance, including the SJCF‑4B Charter (2026), has further streamlined and formalised the APA process. This guidance clarifies procedural expectations and strengthens the programme’s role as a key instrument for dispute prevention in France.

The French APA programme is administered by the SJCF-4B Bureau (Prévention et résolution des différends internationaux) within the DGFiP. This bureau acts as the French competent authority for transfer pricing APAs and is also responsible for handling mutual agreement procedures (MAPs). Official guidance confirms that APA applications must be submitted to SJCF-4B and, in bilateral or multilateral cases, must be mirrored in the other relevant jurisdictions.

The 2026 SJCF-4B charter introduces a more structured framework for administering the programme. It provides for the appointment of a designated contact person, the formal opening of the review process within two months of receipt of a complete file, and a staged approach combining pre-filing exchanges, technical meetings and, where applicable, negotiations with the foreign competent authority. This underscores that the French APA process is increasingly managed as a formal project rather than as an open-ended ruling discussion.

There is clear co-ordination between APAs and MAPs in France, as both procedures are handled by the same specialised bureau, SJCF-4B. However, the two procedures remain legally distinct and pursue different objectives. An APA is preventive in nature and seeks to secure the transfer pricing treatment of future transactions, whereas a MAP is curative and aims to eliminate instances of double taxation.

In practice, co-ordination is possible where the same transaction gives rise to both prospective and historical issues. The French guidance and the 2026 charter both indicate that an APA may include revision mechanisms and, in certain cases, a roll-back. The roll-back mechanism was introduced for the first time in the 2025 charter and is, in principle, available for a three-year period.

The 2026 charter further notes that the French competent authority may consider retroactive application of an APA in order to align the APA outcome with a MAP or to address mismatches in domestic timelines between jurisdictions. This approach makes the French system more flexible than a strictly forward-looking APA model.

The French APA programme is limited to international intragroup transactions that fall within the scope of transfer pricing rules. According to the administrative doctrine, an APA relates to the method used to determine transfer prices for future intragroup transactions. It is considered particularly appropriate where the application of the arm’s length principle raises significant reliability issues or where the factual circumstances are unusually complex.

Bilateral APAs are available where France has a treaty partner that is both willing and able to negotiate under the mutual agreement procedure framework. However, the implementation of bilateral APAs presents a number of challenges, notably those relating to co-ordination between tax authorities and the alignment of their respective positions and interests.

Unilateral APAs also remain available, but they are presented as offering more limited protection, as they do not bind the foreign tax administration.

The administrative doctrine on unilateral APAs expressly notes that they do not eliminate the risk of the foreign jurisdiction challenging the same transaction. In practice, unilateral APAs are generally reserved for situations where the other jurisdiction does not operate an APA programme, where the transactions involve too many countries to make a bilateral or multilateral approach practical, or where the issue is narrow in scope and primarily French-facing.

The 2026 charter further suggests a more selective approach in practice. It introduces an optional early “strategic meeting” for cases involving strategic business changes, complex projects, or a second renewal request. This reflects the administration’s expectation of more front-loaded dialogue in cases that are structurally complex or commercially sensitive.

The taxpayer is expected to file a letter of intent at least six months before the opening of the first fiscal year covered by the APA and to submit the complete APA file at least two months before that year begins. For a calendar-year taxpayer, the 2026 charter illustrates this timetable by requiring a prefiling meeting and submission of the letter of intent before 1 July of year N, followed by the complete filing before 1 November of year N, for an APA intended to cover years N+1 to N+5.

This timetable is more operationally demanding than the prior French APA procedure, which focused mainly on meeting the six-month lead-time requirement. As a result, the new charter compels taxpayers to begin preparations significantly earlier, particularly where a bilateral negotiation is anticipated or where the fact pattern involves restructurings, intangibles, or financial transactions that require detailed supporting documentation.

France does not charge a filing fee for APA applications. This remains one of the attractive features of the French programme, particularly when compared with jurisdictions that impose substantial user fees for bilateral or multilateral APAs. The absence of a formal filing fee does not, however, eliminate the practical costs associated with the process, given the level of preparation required under the 2026 charter.

In practice, the main costs arise from the preparation of the APA file, the co-ordination of bilateral submissions and the level of responsiveness expected during the review phase. The charter requires taxpayers to submit a detailed pre-filing presentation, provide a complete file by a fixed deadline, and respond promptly to any follow-up requests.

French APAs are generally concluded for a period of five years. The administrative doctrine indicates that the duration is determined during the negotiation process and that five years serves as the usual benchmark. However, the final term may vary depending on several factors, including the nature of the business, the sector concerned, the specificity of the products, and the need to align with agreements already concluded in other jurisdictions.

Renewal remains possible but is not automatic. The approach adopted by the French competent authority may evolve to reflect industry practices or developments identified in the analysis of certain transactions during international negotiations. The charter emphasises the need for a new formal submission to be filed within the required timeframe.

A further practical development concerns the strengthening of post-signature monitoring. The taxpayer is required to file an annual report demonstrating how the agreed methodology has been applied. The charter specifies that failure to remedy the absence of such a report within 30 days following formal notice may result in termination of the APA for the year concerned. As a consequence, the practical durability of an APA depends not only on the initial negotiation, but also on consistent and disciplined year-by-year compliance.

French practice allows an APA to have retroactive effect, but only where this is expressly provided for. Current administrative guidance states that an APA may include revision or adjustment mechanisms, and that its effective date is one of the core terms of the agreement.

The APA charter expressly refers to the possibility of a roll-back, which in practice is limited to three years. A roll-back may be requested by the taxpayer or proposed by the French competent authority in order to align the APA with related proceedings, including a MAP. This means that the French APA programme is not limited to providing prospective certainty in a narrow sense. In appropriate cases, it can also help to resolve earlier years, provided that the relevant facts are sufficiently consistent across the period concerned. The position remains highly fact-sensitive, and retroactive application is not automatic. The taxpayer must demonstrate that the same transfer pricing method and underlying assumptions remain valid for the prior years.

Transfer pricing reassessments may give rise to significant penalties. These include late payment interest as well as penalties for deliberate breaches. The French Tax Authorities may apply a penalty for bad faith amounting to 40%, which can be increased to 80% in cases of fraud or abuse.

In addition to standard tax law penalties, specific penalties apply in cases of failure to comply with transfer pricing documentation requirements. Under Article 1735 ter of the French Tax Code, failure to provide complete transfer pricing documentation may result in a penalty equal to the greater of (i) 0.5% of the value of non-documented transactions, or (ii) 5% of the transfer pricing reassessments notified in relation to those transactions, subject to a minimum amount of EUR50,000.

This minimum penalty applies to financial years opened as from 1 January 2024. For financial years opened prior to that date, the applicable minimum penalty is EUR10,000. These penalties apply only where the documentation is not provided or remains incomplete after the expiry of a formal 30-day notice period.

From a procedural perspective, in France, transfer pricing documentation must be available as from the first day of a tax audit and is typically requested by the FTA during the initial meeting.

We also observe an increasingly systematic approach by the FTA in requesting transfer pricing documentation. Formal notices are being issued promptly and routinely, including in respect of companies that became subject to the documentation requirements only as from 2024.

France has implemented the OECD three-tiered transfer pricing documentation framework, which comprises a Master File, a Local File, and country-by-country reporting (CbCR). In addition, a simplified transfer pricing obligation (the “TP form”) applies to certain taxpayers.

Local and Master File requirements apply to entities that meet the thresholds set out in Article L13 AA of the French Tax Procedure Code (LPF), namely statutory turnover or gross assets of at least EUR150 million. The documentation must be contemporaneous and must accurately reflect the taxpayer’s transfer pricing policy. It must include, in particular, a detailed functional analysis, a description of intra-group transactions, and the selection and application of the transfer pricing method.

A specific feature of the French threshold test for the application of Article L13 AA of the LPF is that it is assessed not only at the level of the French entity itself, but also at the level of: (i) any entity that directly or indirectly holds more than 50% of the shares or voting rights in the French entity, and (ii) any entity that is directly or indirectly more than 50% held by the French entity. As a result, for example, where a parent company generates EUR1 billion in turnover and holds a French distribution subsidiary generating EUR2 million in turnover, that French subsidiary is nevertheless subject to the French transfer pricing documentation requirements.

It should also be noted that the threshold is assessed on a statutory basis rather than on a consolidated basis.

It should further be noted that only transactions exceeding EUR100,000 per transaction category are required to be documented through detailed functional and economic analyses.

The transfer pricing documentation must be made available to the French Tax Authorities at the start of a tax audit. Where a taxpayer fails to provide the required documentation, the tax authorities may issue a formal notice (“mise en demeure”).

Following such notice, the taxpayer has 30 days to provide complete documentation.

For entities that do not fall within the scope of Article L13 AA of the LPF, the tax authorities may still request transfer pricing information under Article L13 B of the LPF, where there is a presumption of profit transfer abroad. This request is also subject to a 30-day response deadline.

In practice, the FTA strictly enforce these timelines. Incomplete or late responses are frequently used to justify penalties and may weaken the taxpayer’s position during a tax audit. This reinforces the importance of having transfer pricing documentation readily available and aligned with the actual conduct of the parties.

A simplified transfer pricing documentation obligation also exists in the form of an annual transfer pricing disclosure to be filed electronically within six months following the filing of the corporate income tax return. This requirement is provided for under Article 223 quinquies B of the French Tax Code, through tax return form “2257-SD”. Taxpayers must report general information regarding the group and the local entity, as well as a list of intra-group transactions which, by nature, exceed EUR100,000. This simplified transfer pricing documentation applies to French entities whose statutory turnover or gross assets (or those of their shareholders or subsidiaries) exceed EUR50 million.

Country-by-country reporting (CbCR) requirements apply to entities that are part of a group whose consolidated turnover exceeds EUR750 million. The CbCR filing must be made within 12 months following the filing of the tax returns, in accordance with Article 223 quinquies C of the CGI, through tax return form “2258-SD”.

French transfer pricing rules are closely aligned with the OECD Guidelines. These Guidelines are also relied upon in the application of double tax treaties, as Article 9 of the OECD Model Tax Convention expressly refers to the OECD Guidelines.

French administrative doctrine likewise explicitly refers to the OECD Guidelines for the application of the arm’s length principle. In practice, the OECD Guidelines govern the conduct of functional analyses, the selection of appropriate transfer pricing methods, as well as comparability and benchmarking analyses.

Lastly, French administrative courts also refer to and rely on the OECD Guidelines in their case law.

French tax law does not provide for any exception permitting a departure from the arm’s length principle. As a result, all intra-group transactions must be priced as if they were concluded between independent enterprises operating under comparable conditions. This requirement applies uniformly to all categories of transactions, including the provision of goods and services, financial arrangements, and dealings with permanent establishments.

The BEPS project has had a significant influence on the French transfer pricing landscape. France has implemented the main BEPS measures, particularly those relating to documentation requirements, transactions involving intangibles, and financial transactions.

The introduction of the Master File, Local File, and country-by-country reporting has considerably strengthened the transfer pricing documentation framework and increased the level of information available to the tax authorities.

The BEPS focus on value creation has also been incorporated into audit practice. The French Tax Authorities now systematically analyse DEMPE functions in transactions involving intangibles. Business restructurings are closely examined, particularly with regard to potential transfers of profit potential.

In addition, dispute resolution mechanisms have been reinforced. France applies both the EU Arbitration Convention and the mutual agreement procedure framework, which have improved the resolution of double taxation cases.

Lastly, the implementation of strict interest limitation rules under Article 212 bis of the French Tax Code, reflecting BEPS Action 4, has had a material impact on intragroup financing structures.

France has positioned itself as one of the most proactive jurisdictions in the implementation of BEPS 2.0. It has taken an active role in both the development and domestic implementation of Pillar Two, while continuing to support the adoption of a multilateral solution for Pillar One.

Pillar Two has been implemented through the transposition of Directive (EU) 2022/2523 into French law. Article 33 of the Finance Act for 2024, supplemented by Article 53 of the Finance Act for 2025, introduced a comprehensive framework into the French Tax Code (Articles 223 VA to 223 WW). This framework establishes the three GloBE mechanisms:

• the Income Inclusion Rule;
• the Qualified Domestic Minimum Top-up Tax; and
• the Undertaxed Profits Rule.

Administrative guidance was published on 8 October 2025, providing detailed clarification on key concepts, including intermediary entities, permanent establishments, and the determination of consolidated financial statements for GloBE purposes. Further updates are expected as additional OECD guidance is released.

From a compliance perspective, the first Global Information Return (GIR) is due by 30 June 2026. Failure to comply may result in penalties of up to EUR100,000 per filing, capped at EUR1 million per fiscal year at the group level.

In practice, Pillar Two is expected to increase scrutiny of group structures and effective tax rates and reinforces the need for consistency between transfer pricing outcomes and global tax positions.

As regards Pillar One, France continues to support a co-ordinated multilateral approach but has not enacted implementing legislation, as discussions remain ongoing at the international level. In the interim, France has not relinquished its domestic instruments: the digital services tax, whose constitutionality was confirmed by the French Constitutional Council in September 2025, remains in force irrespective of the outcome of international negotiations. The impact of Amount B is addressed in the following section.

France has not formally implemented Pillar One, Amount B.

However, in updated administrative guidance dated 23 July 2025 (BOI-BIC-BASE-80-10-50), the French Tax Authorities indicated their intention to comply with the international commitments undertaken in this area. Accordingly, the authorities have stated that they will adopt the necessary measures to prevent double taxation that may arise from the unilateral application of Amount B by certain jurisdictions, provided that the following three cumulative conditions are met.

• The jurisdiction concerned is a member of the OECD Inclusive Framework.
• A tax treaty is in force between France and that jurisdiction.
• That jurisdiction effectively applies Amount B to distributors operating in its market.

French transfer pricing rules allow risks to be allocated within a group, provided that such allocation is consistent with the functional analysis.

An entity may be contractually assigned risks relating to another entity’s operations. However, for this allocation to be recognised, the entity must demonstrate that it has the financial capacity to bear those risks and that it effectively exercises control over them. This includes the ability to make and influence key decisions relating to the assumption and management of those risks. This approach is aligned with the OECD Guidelines on risk control.

In practice, the French tax authorities closely examine arrangements involving limited-risk entities. Guaranteed returns or stable margins are accepted only where the functional profile supports such characterisation. Situations in which losses are allocated to entities described as routine are frequently challenged, particularly where there is insufficient evidence that those entities exercise an adequate level of control over the relevant risks.

French practice is broadly aligned with the Authorised OECD Approach. This approach involves identifying the functions performed, assets used, and risks assumed by the permanent establishment, and attributing profits accordingly, in line with Article 5 of the OECD Model Tax Convention.

Internal dealings between an entity and its permanent establishment are recognised for transfer pricing purposes. Accordingly, the analysis should follow standard transfer pricing principles.

In practice, the French Tax Authorities pay particular attention to the following aspects:

• the allocation of functions between the entity and its permanent establishment;
• the existence of decision-making capabilities at the level of the permanent establishment; and
• the consistency between contractual arrangements and actual operational activities.

No specific safe harbour applies. Each situation is assessed on the basis of its own facts and circumstances.

The UN Practical Manual on Transfer Pricing does not have a direct impact on transfer pricing practice in France.

It is not referenced in French legislation, administrative doctrine, or standard audit practice. The French Tax Authorities rely primarily on the OECD Transfer Pricing Guidelines, which constitute the central interpretative framework for the application of Article 57 of the French Tax Code.

In practice, the UN Manual may be used as a secondary reference in specific contexts, particularly where transactions involve developing countries or where treaty provisions are influenced by the UN Model Convention. However, such use remains limited and does not influence the overall approach of the FTA.

Although French legislation does not formally provide for a transfer pricing safe harbour for low value-adding intra-group services, in practice taxpayers may apply a standard mark-up of 5% where the services meet the criteria set out in the OECD Transfer Pricing Guidelines. In such cases, there is no requirement to perform a dedicated benchmarking analysis. The key condition is the correct characterisation of the services as low value-adding, supported by an appropriate and well-documented functional analysis.

With respect to financial transactions, France applies automatic limitations on the deductibility of interest. Article 39, 1–3° of the French Tax Code sets a reference interest rate based on Banque de France data, which determines a maximum deductible interest rate (the “ceiling rate”). Where the taxpayer applies this ceiling rate, no supporting benchmarking analysis is required. However, the application of a higher interest rate remains possible, provided that the taxpayer can sufficiently demonstrate the arm’s length nature of the rate, in practice through a benchmarking analysis.

In addition, Article 212 bis of the CGI limits the deductibility of net borrowing costs to the higher of EUR3 million or 30% of EBITDA, in line with the EU Anti-Tax Avoidance Directive.

These mechanisms do not eliminate transfer pricing risk. The French Tax Authorities retain the ability to challenge both the characterisation of services and the pricing of financial transactions where they consider that the conditions deviate from the arm’s length principle.

French transfer pricing rules do not contain specific provisions addressing location savings. Consequently, there is no systematic adjustment mechanism or predefined methodology. Where relevant, any analysis must therefore be carried out on a case-by-case basis.

French transfer pricing practice is characterised by a strong emphasis on economic substance and on the provision of evidence demonstrating that profit allocation aligns with value creation, particularly in the context of tax audits.

Although no specific statutory provision applies, the French Tax Authorities frequently challenge arrangements in which the allocation of profits does not reflect the allocation of functions, risks, and assets. In this context, particular attention is given to:

• marketing and commercial expenses incurred by French entities that may contribute to the development of group intangibles, especially where such entities report low or negative results (for example, “flagship stores” in the luxury industry); and
• business restructurings involving the implicit transfer of functions, risks, or assets.

Financial transactions are subject to increasing scrutiny in France.

French administrative guidance was significantly strengthened in 2021 with the publication of detailed guidance in the administrative doctrine, which incorporates the principles set out in Chapter X of the OECD Guidelines. This guidance clarifies the French tax authorities’ approach to intra-group financing, including the assessment of the borrower’s creditworthiness, the delineation of financial transactions, and the role of implicit group support.

Taxpayers are required to demonstrate that interest rates reflect market conditions, taking into account the specific characteristics of the transaction, such as maturity, currency, guarantees, and the borrower’s standalone credit profile. Simplified approaches or unsupported assumptions and comparability adjustments are frequently challenged, as confirmed by recent case law.

French tax law also provides for automatic interest deductibility limitations. Article 39, 1–3° of the French Tax Code establishes a reference rate based on Banque de France data, which determines a maximum deductible interest rate (“ceiling rate”). When this rate is applied, taxpayers are not required to provide any supporting benchmarking analysis. The application of a higher interest rate remains possible, provided that sufficient evidence – typically a benchmarking analysis – is supplied to demonstrate that the selected rate is arm’s length.

In addition, Article 212 bis of the CGI limits the deductibility of net borrowing costs to the higher of EUR3 million or 30% of EBITDA, in line with the EU Anti-Tax Avoidance Directive.

Transfer pricing and customs valuation are governed by distinct legal frameworks, yet they are closely interconnected in practice. Transfer pricing determines taxable income under Article 57 of the French Tax Code, while customs valuation determines the customs value of imported goods under the EU Customs Code (UCC), which serves as the basis for customs duties and import VAT. In a group context, the transfer price applied to imported goods therefore has a direct and immediate impact on customs valuation.

French Customs recognises that transfer pricing may be used as a basis for customs valuation under the transaction value method, provided that the relationship between the parties does not influence the price within the meaning of Articles 70 of the UCC and 134 of Implementing Regulation 2015/2447. Transfer pricing documentation, intercompany agreements, and even APAs may be relied upon as supporting evidence. However, such documentation does not replace the specific customs analysis required to demonstrate that the price is acceptable for customs purposes.

A key practical difficulty arises from year-end transfer pricing adjustments. While transfer pricing policies frequently rely on ex-post adjustments, customs valuation requires a price that is known or determinable at the time of importation. French Customs addresses this mismatch through specific mechanisms. Importers may apply for a provisional value authorisation, allowing goods to be declared based on estimated values and subsequently regularised once final transfer pricing figures are available. Alternatively, an adjustment authorisation under Article 73 of the UCC may permit the use of predetermined adjustment ratios, enabling the declaration of a final customs value at the time of import without the need for subsequent corrections.

These mechanisms require prior authorisation from French Customs and are subject to detailed review. In particular, customs authorities assess the consistency of the pricing policy, the nature and methodology of the adjustments, and the reliability of the supporting data. Financial guarantees may also be required where the final customs value remains uncertain.

The interaction between transfer pricing and customs valuation has been further shaped by the Court of Justice of the European Union’s Hamamatsu decision (20 December 2017, C–529/16), which questioned the acceptability of customs values based on transfer prices subject to retroactive adjustments. Despite this decision, French Customs continues to accept transfer pricing-based valuations where appropriate authorisations are in place, although the issue remains sensitive at EU level.

In practice, effective co-ordination between transfer pricing and customs functions is a key compliance issue. Taxpayers must ensure consistency between transfer pricing policies, customs declarations, and financial data. The increasing use of data analytics by tax and customs authorities has further reinforced the need for alignment. Failure to anticipate these interactions may result in additional customs duties, penalties, or disputes.

Transfer pricing controversies in France follow a structured process comprising both a pre-litigation phase and a litigation phase. The main steps are as follows:

• oral and adversarial debate;
• written phase;
• hierarchical appeals;
• tax committee; and
• administrative court jurisdiction.

During the pre-litigation phase, taxpayers initially engage in an oral and adversarial discussion with the tax audit team. This is followed by the submission of written responses to the reassessment proposal issued by the French Tax Authorities. Taxpayers may further escalate discussions within the tax administration by submitting hierarchical appeals, notably to the chief tax inspector and the departmental interlocutor.

In addition, taxpayers have the option to defend their position before a non-binding tax committee (Commission des impôts directs et des taxes sur le chiffre d’affaires).

If the dispute is not resolved, the taxpayer may initiate the litigation phase by filing a formal claim pursuant to Article R190–1 of the French Tax Procedure Code. Where such claim is rejected or remains unanswered, the matter may be brought before the Administrative Tribunal.

As a general rule, the disputed tax must be paid prior to initiating litigation. However, a deferral of payment may be requested under Article L277 of the LPF, subject to the provision of appropriate financial guarantees.

Judicial proceedings involve three levels of jurisdiction. The first level is the Administrative Tribunal (tribunal administratif). Decisions may be appealed before the Administrative Court of Appeal (Cour administrative d’appel) and, ultimately, before the highest administrative court, the Conseil d’État.

Judicial precedent plays a central role in the interpretation of transfer pricing rules in France. French courts have developed a consistent body of case law interpreting Article 57 of the French Tax Code. This case law addresses key issues such as the burden of proof, comparability factors (including functional analysis), the use of comparables, the determination of the appropriate arm’s length reference value, and the treatment of reorganisations, among others (see 14.2 Significant Court Rulings).

Burden of Proof

• The French Tax Authorities benefit from a rebuttable presumption of profit shifting only where they first establish the existence of an advantage, either through a comparability analysis or by demonstrating an unjustified difference between the agreed price and the market value. The burden then shifts to the taxpayer, who must rebut this presumption by demonstrating that the benefit granted was matched by at least equivalent consideration (Conseil d’État, 7 November 2005, Nos 266436 and 2266438, Cap Gemini; Conseil d’État, 16 March 2016, No 372373, Sté Amycel).
• The existence of recurrent losses, while it may constitute an indication of profit shifting, is not in itself sufficient to establish a transfer of profit, insofar as a loss-making situation may result from other economic factors unrelated to transfer pricing (CAA Versailles, 5 May 2009, No 08VE02411, Man Camion & Bus).
• A conversion from distributor status to agent status, resulting in reduced remuneration, does not in itself constitute profit shifting (CAA Versailles, 16 February 2012, No 10VE00752, Microsoft France).
• The deduction of the R&D tax credit (crédit d’impôt recherche) from the cost base in the context of the recharging of R&D services does not, in itself, constitute profit shifting (Conseil d’État, 19 September 2018, No 405779, Sté Philips France).

Importance of the Functional Analysis/Comparability Criteria

• The comparability analysis must be sufficiently precise and must take into account the actual circumstances, in particular the entity’s functions within the economic process and value chain (Conseil d’État, 16 March 2016, No 372373, Sté Amycel).
• A related party may assume economic risk without necessarily being characterised as the “principal entrepreneur” within the group, provided that it exercises effective control over that risk, implements mitigation measures, and has the financial capacity to bear it (Conseil d’État, 4 October 2021, Nos 443130 and 443133, SKF/RKS).

Arm’s Length Range and Comparables

• Reliance on the median of the arm’s length range may be appropriate depending on the circumstances of the case (Conseil d’État, 6 June 2018, No 409645, GE Healthcare).
• While, in principle, any point within the interquartile range may be selected, the FTA may rely on the median in order to eliminate extreme values, unless the taxpayer demonstrates that another point within the range would be more appropriate (CAA Paris, 22 November 2023, No 21PA06233, SASU Menarini Diagnostics France).
• The FTA may perform a reassessment based on a single internal comparable in the context of the application of the CUP method, provided that it demonstrates that this reference has a sufficient level of reliability (Conseil d’État, 7 May 2025, No 491058, Sté A. Menarini Diagnostics France).

Intangible and Marketing Contributions

• The recognition of the concept of a “flagship” store confirms that marketing and operating expenses incurred by a French entity – beyond those expected of a simple independent distributor – may evidence its contribution to the development of the group’s brand intellectual property. Such excess costs may therefore be characterised as profit shifting (CAA Paris, 30 June 2022, No 20PA03601, Ferragamo France).
• A change in functional status, such as a conversion from distributor to commissionaire following a reorganisation, may constitute an implicit transfer of a customer base where the reorganised entity previously enjoyed commercial autonomy and maintained its own customer relationships (Conseil d’État, 4 October 2019, No 418817, Piaggio).
• By contrast, in the absence of commercial autonomy, a branch cannot be considered to have developed a customer base distinct from that of its parent company. Accordingly, no implicit transfer of intellectual property can be characterised in such circumstances (Conseil d’État, 21 December 2022, No 450796, Bupa Assurances).

Financing

• The arm’s length interest rate must reflect the borrower’s standalone creditworthiness and may be established by reference to comparable financing conditions, including bond yields (Conseil d’État, 10 July 2019, Nos 429426 and 429428, Wheelabrator Group).
• Demonstrating that an interest rate is at arm’s length requires a detailed justification of any comparability adjustments made, particularly with respect to credit risk and the specific characteristics of the transaction (CAA Paris, 18 December 2025, No 24PA01640).

France does not impose restrictions on outbound payments in uncontrolled transactions. There are no foreign exchange controls or similar limitations affecting such payments.

No direct restrictions apply to outbound payments between related parties. However, several tax provisions may limit their deductibility from a tax perspective.

French transfer pricing regulations do not contain specific provisions addressing the impact of foreign legal restrictions.

Information related to APAs is released through official reports and communications from the French Tax Authorities. These sources provide data on the number of APA applications filed each year, along with general information on their outcomes.

The latest statistics published by the OECD for 2024 indicate that France reported a significant APA caseload. At the beginning of the year, there were 159 cases in the opening inventory, with 49 new cases initiated during the year. In total, 32 cases were closed, of which 21 were granted and 11 were rejected; no cases were closed for other reasons. Consequently, the year-end inventory increased to 176 cases. The OECD statistics further show that the average time required to grant an APA in France during the reporting period was 35 months. This suggests that while the French APA process is available and actively used, it can, in practice, remain relatively lengthy.

With respect to transfer pricing audit outcomes, official statistics are also published on a regular basis. In 2024, transfer pricing reassessments (on a tax base basis) amounted to EUR3,375 million, representing a 44% increase compared to 2023.

In addition, transfer pricing-related reassessments accounted for 50% of the total reassessments made in the context of international taxation in 2024. The average reassessment amount per case reached EUR9 million, up from EUR6.7 million in 2023.

While not explicitly prohibited by statute, French courts require that taxpayers be placed in a position to review and challenge the comparables used by the tax authorities. As a result, comparables that are not sufficiently disclosed, or that cannot be meaningfully analysed, cannot be relied upon to support a transfer pricing adjustment.

This principle has been consistently confirmed by case law, including decisions in which adjustments were rejected due to the use of non-transparent or non-verifiable comparables.

In practice, the French Tax Authorities rely on publicly available data or comparables that can be disclosed with sufficient detail. The use of undisclosed comparables is therefore effectively excluded and may be challenged as a breach of the adversarial principle.