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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.
 French tax law provides for unitlateral (Since January 1st, 2005), bilateral or multilateral advance pricing agreement.
The advance pricing agreement "APA" is a ruling stating that the transfer pricing method agreed between the French tax authorities and the enterprise complies with the French transfer pricing rules for an agreed period.
The APA covers only the transfer price method never the prices themselves. The APA process must be requested by the enterprise, if needed on a no name basis using a external tax adviser. The request must propose a transfer pricing method supported by facts and a functional analysis. The application must also describe the associated transaction and the related country(ies).
Since January 1st, 2005, Advance Pricing Agreement “APA” granted by the French tax authorities are legally considered as a formal opinion which can only be challenge by the tax authorities in specific situations.
With this respect, French Tax authorities issued guidelines providing that a tax assessment is only possible in case of misrepresentation, hidden information, errors or omissions made by the taxpayer during the negotiation of the APA. A tax assessment remains also possible when the enterprise does not comply with the commitments part of the APA or in case of swindling. The French tax authorities keep the right to audit the application of the APA by the beneficiary.
IMPORTANT: French tax authorities announced that SME will benefit very soon from a simplified procedure to conclude unilateral and bilateral Advance Pricing Agreement.
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