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This chapter is not exhaustive and is limited to broadly outline the tax consequences of the main events occurring when doing business in France. It does not constitute a tax advice or a client - attorney relationship. Materials are not suitable for tax analysis. Visitors are invited to consult a tax lawyer before taking any decision.
 Associated enterprises
Correlative adjustment
Economical double taxation
Intra-group services
Juridical double taxation
Management fees
Shareholders services
Steward ship
 Transfer prices are the prices charged between associated enterprises below located in different jurisdictions for the transfer of goods, services and/or intangible property. For example the selling price of a service charged by an enterprise A located in France to a sister company B located in USA is a transfer price. The French tax authorities and the IRS have both the right to check with their own transfer pricing rules if the price charged by A and paid by B is arm's length or constitute a hidden transfer of profit from A to B (Price below market value) or from B to A (Price above market value).
Management fees are charged for management and/or administrative services rendered by a member of a group company to the other members. Generally such fees are tax deductible as long they are rendered for the benefit of the members of the group "intra-group services" and not for the benefit of the shareholders "Shareholders services or steward ship" (Book consolidation, general shareholders meeting, cost of issuing shares...) Intra-group services should be charged out by the member rendering the services and recovered from the members of the group benefiting from the services.
Associated enterprises are entities directly or indirectly managed, controlled and/or owned by the same shareholder(s).
Economical double taxation refers to the taxation of the same income by two (or more) jurisdictions on two (or more ) different taxpayers e.g. corporate profit taxed first at the company level and second at the shareholders level or two jurisdictions taxes the same profit as part of a transfer pricing adjustment.
Juridical double taxation refers to the taxation of the same taxpayer in two (or more) different jurisdictions with respect of the same income e.g. a corporation Y incorporated in country A and managed in country B. If country A taxes Y on a worldwide basis and country B refers to the place of management, corporation Y will be taxable on the same income in 2 different jurisdictions.
Correlative adjustment is necessary to avoid a double taxation resulting of a transfer pricing adjustment in country B, when the same profit is already taxed in country A. In such a case the correlative adjustment results in the reduction of the tax liability of Y in jurisdiction A equal to the corresponding primary adjustment made in jurisdiction B. Most tax treaties do not include a correlative adjustment provision. If provided, most tax treaties do not request that the two tax authorities agree on a correlative adjustment.
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