16th july 2025
A Charter applicable to the relationship between companies and the DGFIP in the framework of advance pricing agreements (APAs) was published on the tax administration website on April 16th, 2025.
The government's "roadmap" for fighting against all kinds of public finance fraud of June 2nd, 2023 increased pressure on tax payers1. However, to offer more certainty, APAs team was increased to reduce "the time taken to process companies' requests for [APA] in order to simplify their management"2. The administration's lack of resources and the length of these procedures made unrealistic an amendment to the last draft Finance Bill requiring an APA for any French entity whose turnover is greater than or equal to €50 million and which belongs to an international group.
However, multinational companies face more and more aggressive tax audits and are continuously expressing their need to secure their transfer pricing policies. The APA has not yet achieved this objective.
In order to modernize it and increase its attractiveness, an update of comments relating to transfer pricing, mutual agreement procedures and advance pricing arrangements was published on January 15th, 20253.
For the same reason, to "establish a relationship of trust", along with a significant increase in the number of people dedicated to APAs, the French Tax Authorities (FTA) have published a Charter which "reinforces the reciprocal commitments of the administration and of the taxpayer with the aim of optimizing the examination of the application"4. This Charter, which will be "optional in 2025", is a "summary of the reciprocal obligations between taxpayers and the FTA in order to capture the spirit and pace of the work, in accordance with the respective timetables of each."5
The Charter incorporates the innovations contained in FTA’s guidelines, while establishing an effective examination framework.
CONFIRMATION OF THE MAIN INNOVATIONS CONTAINED IN THE ADMINISTRATIVE GUIDELINES
Confidentiality
After reminding the rules governing tax confidentiality, the Charter states that, notwithstanding the independence of the APA procedure from any other procedure, "the French Tax Authorities may be required to provide documents in the framework of legal procedures [Note: criminal procedures].6
Retroactivity
The Charter also includes the possibility for taxpayers to submit a request to the FTA for a roll-back7. It is limited to 3 years and subject to a formal request from the taxpayer.
Roll-back aims at offering more security. It would make possible, when agreed, to resolve double taxation without initiating a mutual agreement procedure, if any, or to cover the period between the financial years concerned by a mutual agreement procedure and the beginning of the advance transfer pricing arrangement8. The Charter even allows initiatives of the French Tax Authorities in this respect.
A REVISED EXAMINATION PERIOD
Following the example of the administrative guidelines9, the Charter provides that prior to the submission of the letter of intent, companies are invited to contact the French Tax Authorities in order to arrange a preliminary meeting to discuss the feasibility and to set a provisional timetable, where appropriate. In this respect, the taxpayer must send the support for the presentation it intends to make 15 days before the preliminary meeting.
Secondly, the Charter formalises the application by submitting a letter of intent at least 6 months before the start of the first financial year10. Except in case of suspension or rejection of the request, the taxpayer must submit a complete application no later than 2 months before the start of the first financial year for which the APA is requested.
In the event of advance bilateral arrangement or a complex situation, the Charter indicates that a provisional work schedule specific to the request is defined along with with the company.
The taxpayer must answer within 45 days to any request from the Competent Authorities, unless an extension is granted.
It is also specified that if the taxpayer has not complied with its obligations and has acted in bad faith, "all APA projects of the Group may be cancelled".
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The new Charter is therefore designed to promote the ongoing development of APAs and to provide a more secure framework for this procedure, offering renewed dynamism by setting a precise timeline as well as obligations.
We can however fear that the increasingly unstable international and economic environment will not allow APAs to meet their objective despite this renewed procedure.
INDEX
1 Lowering of the threshold for documentary obligation, increase of the fine applicable if the documentation is not-compliant, "enforceability" of their own documentation against companies and extension of the administration’s intervention period in the event of transfer of certain intangible assets - For more details, please refer to our article "PLF 2024: transfer pricing control measures already announced"
2 https://presse.economie.gouv.fr/01062023-dossier-de-presse-feuille-de-route-du-plan-lutte-contre-toutes-les-fraudes-aux-finances-publiques/
3 BOI-SJ-RES-20-10 and BOI-SJ-RES-20-20
4 https://www.impots.gouv.fr/international-professionnel/laccord-prealable
5 Relationship of trust between Administration and citizens - Relations between the tax administration and the taxpayer: current situation and perspectives.- Proceedings of the IFA annual evening held on 2 December 2024 - Study by Amélie Verdier, Pierre-Henri Durand, Aurélie Sauzet, Frédéric Iannucci, Béatrice Deshayes, Laurence Brochet, Laurent Martel, Éric Vanel, Stéphanie Prudent and Pierre-Olivier Pollet
6 Cass. Com, 14 October 2020, Appeal no. 19-11.115 - For application in the context of the initiation of proceedings for Tax raids under Article L 16 B of the Book of Tax Procedures
7 BOI-SJ-RES-20-10 n° 85 and 90
8 BOI-SJ-RES-20-10 n° 85
9 BOI-SJ-RES-20-10 n° 60
10 BOI-SJ-RES-20-10 n° 70 - The administrative doctrine also states that "the request must be submitted at least six months before the start of the first financial year covered by the request for agreement".
