Finance Act 2024 : reinforcement of documentation requirements and transfer pricing audits

Article 116 of the Finance Law for 2024, published in the Journal Officiel on December 30, 2023, confirmed measures with a substantial impact on transfer pricing. These evolutions are reflected in a reinforcement of the documentary obligations imposed on companies, but also in measures designed to reinforce audits by the tax authorities.

In summary, these measures consist in :

A decrease in the documentation requirement threshold for transfer pricing to 150 million euros of turnover excluding tax or total gross assets (instead of 400 million euros), as of January 1, 2024 ;
A reversal of the burden of the proof resulting from the inclusion of a presumption of transfer of profits abroad in the event of non-compliance with the policy described in the documentation and transmitted to the tax authorities as part of an audit. The aim of this measure is to make the information sent to the tax authorities enforceable against companies in the event of a discrepancy between the transfer pricing policy described and that actually implemented.
The penalties for non-compliance with the obligation to submit transfer pricing documentation will be increased fivefold, to €50,000, from January 1, 2024.
In the event of certain intangible asset transfers and under conditions : (a) extension of the tax authorities’ reassessment period from 3 to 6 years and (b) possibility for the tax authorities to use financial data subsequent to the disposal of the asset.

All these measures reflect the French tax authorities’ determination to ensure that transfer pricing rules are properly applied, and require companies to exercise the most rigorous prudence in managing their intra-group relations.

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Finance Act 2024 : reinforcement of documentation requirements and transfer pricing audits