#Transfer Pricing Lawyer in France

A transfer pricing lawyer advises international groups on valuing transactions between related entities established in different countries. Transfer pricing refers to the price of goods, services, royalties or financing exchanged within the same group. The lawyer’s role is to make this pricing policy legally sound, to build the documentation required by the tax authorities and to defend the company in the event of an audit. Hashtag Avocats, a law firm in Paris, assists tax departments and business leaders with these international tax issues. Every situation is different and calls for a dedicated analysis.

The arm’s length principle, the foundation of transfer pricing

The arm’s length principle governs the whole subject. It requires transactions between associated enterprises to be priced as if they took place between independent enterprises. Two companies of the same group must therefore apply market conditions between themselves. Otherwise, part of the taxable profit may be shifted artificially to a country with lower taxation.

Under French law, Article 57 of the French Tax Code (Code général des impôts, CGI) is the central provision. It allows the tax authorities to add back to taxable income the profits indirectly transferred to enterprises located outside France, by increasing or reducing purchase or sale prices. This indirect transfer of profits can take various forms: overvalued prices, excessive royalties or loans granted without normal interest.

The transfer pricing methods recognised by the OECD

The OECD principles distinguish five transfer pricing methods. The choice of method depends on the nature of the transaction, the availability of comparables and the functions performed by each entity. The lawyer helps select the most reliable method and justify why it is appropriate.

Traditional transaction methods

The comparable uncontrolled price method compares the price charged between related entities with that of an equivalent transaction between independent parties. The resale price method starts from the resale price to an end customer, from which a normal gross margin is deducted. The cost plus method adds an appropriate margin to the supplier’s cost price. These three methods rely directly on the analysis of comparables.

Transactional profit methods

The transactional net margin method examines the net margin ratio earned on a transaction, relative to an appropriate base such as costs or turnover. The profit split method allocates the overall profit between the entities according to each one’s contribution. These methods often apply when transactions are highly integrated or when direct comparables are lacking. The administrative guidance in BOFiP BOI-BIC-BASE-80-20 sets out the conditions for applying Article 57 of the CGI and the procedure for adjusting transfer prices.

French transfer pricing documentation requirements

Certain companies must keep documentation justifying their transfer pricing policy available to the tax authorities. Article L13 AA of the French Tax Procedure Code (Livre des procédures fiscales, LPF) sets out the content of this obligation. The documentation has two parts: a master file, covering the group of associated enterprises, and a local file, specific to the entity audited in France.

This file describes the business, the group structure, the functions performed, the assets used and the risks assumed by each entity. It also sets out the methods chosen and their justification. Incomplete documentation exposes the company to penalties and weakens its position during an audit. The lawyer structures this file in advance, so that it withstands scrutiny by the tax authorities.

Transfer pricing audits in France

Transfer pricing audits are among the priorities of the French tax authorities. The auditor analyses the consistency between the stated policy and the economic reality of intragroup flows. They compare the declared margins with those of comparable independent enterprises. A significant gap may trigger a reassessment based on Article 57 of the CGI.

The lawyer acts at every stage of the procedure. They prepare the responses to requests for information, argue the choice of comparables and, where appropriate, challenge the method used by the tax authorities. They may also guide the company towards an advance pricing agreement, which makes the policy legally sound for the future. This work ties in with issues of business taxation and structuring groups of companies.

Anticipating risks through a documented policy

A robust transfer pricing policy rests on a rigorous functional analysis. It identifies the functions, assets and risks of each entity, then remunerates each one accordingly. This approach reduces the risk of recharacterisation and makes dialogue with the tax authorities easier. It is often part of a broader review of the group’s organisation and of mergers and acquisitions.

The firm assists with setting up this policy, formalising it and keeping it up to date. Every situation is different: the group structure, the nature of the flows and the jurisdictions involved shape the choices. Early assistance is always better than a defence mounted in the urgency of an audit.

Intragroup flows covered by transfer pricing

Transfer pricing does not only cover the sale of goods between related entities. It also concerns services, intellectual property royalties, intragroup financing and the allocation of shared costs. Each category of flow calls for its own analysis and an appropriate method. A trademark royalty, for example, is justified by the real value the intangible asset brings.

Intragroup financing deserves particular attention. A loan between related companies must carry an interest rate in line with what an independent borrower would obtain. A loan granted on abnormal terms to a related enterprise established outside France may amount to an indirect transfer of profits within the meaning of Article 57 of the CGI. The lawyer documents these financial terms to prevent any challenge.

FAQ

What is transfer pricing?

Transfer pricing is the price at which one group entity invoices goods, a service, a royalty or financing to another entity of the same group. These prices must comply with the arm’s length principle. They determine how taxable profit is allocated between the countries concerned. Non-compliant pricing exposes the group to a tax reassessment.

Which companies are subject to the documentation requirement?

The documentation requirement under Article L13 AA of the French Tax Procedure Code applies in particular to companies whose annual turnover excluding VAT or gross assets amount to at least €150 million, and to certain companies related to such entities. The companies concerned must prepare a master file and a local file. A lawyer checks whether your company falls within the scope of this obligation and organises compliance with it.

Which transfer pricing methods are accepted?

The OECD recognises five methods: the comparable uncontrolled price, the resale price, cost plus, the transactional net margin and the profit split. The choice depends on the transaction and the comparables available. The method chosen must be the most reliable in light of the facts.

What does a company risk in a transfer pricing audit?

The tax authorities may add back the profits indirectly transferred outside France on the basis of Article 57 of the French Tax Code. The reassessment comes with late-payment interest and sometimes penalties. Solid documentation and a justified method significantly reduce this risk. A lawyer’s assistance protects your position throughout the procedure.

Official sources

• Article 57 of the French Tax Code (CGI), indirect transfer of profits: Légifrance (in French)
• Article L13 AA of the French Tax Procedure Code (LPF), transfer pricing documentation: Légifrance (in French)
• BOFiP BOI-BIC-BASE-80-20, transfer pricing audits: BOFiP-Impôts (in French)

Law verified as at 5 October 2026. This content provides general information and does not constitute legal advice. Every situation is different: contact our team to make your transfer pricing policy legally sound.