France has adopted transfer pricing “clarification” requirements, effective for 2018 tax years, that expand beyond OECD’s guidance (i.e. OECD+).
It is important to note that these additional requirements pose a significant burden to multinationals trying to achieve consistency in preparing transfer pricing reports for all countries simultaneously. Thus, additional requirements will require additional processes, cost and compliance demands.
Summary of new items for Master File:
- Description of the main services providers within the group, other than R&D services, re: related human capital, equipment, financial and logistic resources of the inter-company service providers
- Intangible asset strategy, including information on transactions subcontracted to unrelated R&D sub-contractors
- R&D transfer pricing policies
Summary of items for Local File:
- Business objectives, including risks and financing
- Reconciliation of statutory and management accounts used for transfer pricing
Some of the above items will prove to be controversial, especially if they would infer any information that would be confidential and strategic in nature. Hopefully, such concepts will not be a “copy and paste” exercise for transfer pricing requirements in other countries.
PwC’s Tax Insights link provides additional context of this significant development.