Notion of relevant market remains key to French transfer pricing
July 06, 2011
Taxpayers in France should be aware that they still need to justify their choice of comparables, even if the authorities have limited scope to make adjustments in this area, explain Jean-Luc Trucchi and Edouard Berthelot of Taj
To justify the arm’s-length nature of prices charged among affiliates, it is common practice to rely on searches for comparable companies (also called benchmarks).
Benchmarks are tools making it possible to compare the remuneration of a company (the tested party) within an intercompany transaction, with the remuneration of a set of comparable and independent companies. More specifically, a benchmark makes it possible to identify a market trend, as regards the remuneration of a specific operation, and thus to determine whether the tested party complies with the arm’s-length principle in connection with its intercompany transactions.
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