When it comes to transfer pricing, the question is no longer whether a tax audit is possible, but how to prepare for it—and with what tools. The figures published by the DGFiP for 2024 are unambiguous: 375 adjustments based on Article 57 of the CGI, for an average increase of around €9 million per case, compared with €6.7 million the previous year. This represents a 44% increase in one year in terms of amounts. This is not a temporary trend.
For the finance and tax departments of international groups, this reality requires a strategic understanding of the mechanisms available. Securing a transfer pricing policy does not simply mean producing compliant documentation. It also involves identifying, at each stage, the legal and procedural levers that can be used to either reduce the likelihood of an adjustment or limit its consequences in terms of cash flow, double taxation, and governance.
Transfer pricing security tools do not all come into play at the same stage and do not all serve the same purposes. An effective approach involves coordinating them in a sequential manner: ex ante prevention, management of an ongoing audit, and handling of double taxation once a dispute has arisen.
A condensed version of this analysis was published in Option Droit & Affaires. Read the article →
Before the audit: preventing disputes
Advance pricing agreements (APAs)
The advance pricing agreement (APA) is the most effective ex ante security mechanism. It allows a company to enter into an agreement with the tax authorities on the method of determining the prices applicable to specific intra-group transactions for future fiscal years. Once concluded, this agreement protects the company against any challenge to the method chosen for the fiscal years covered, subject to compliance with the conditions set out in the agreement.
In France, agreements are generally concluded for a period of three to five years. In 2024, 28 agreements were signed, with an average conclusion period of 32 months.
Not all PPAs are equal in terms of protection:
- The unilateral APA is binding only on the French administration. It secures the domestic position, but does not protect against the risk of double taxation in the other State.
- The bilateral APA brings together the competent authorities of the two countries concerned. It aligns tax positions and substantially reduces the risk of double taxation. In the vast majority of situations, it strikes the best balance between procedural complexity and the level of certainty achieved.
- In theory, multilateral APP offers the most extensive protection, but coordination between several competent authorities reserves it for situations of exceptional importance.
The APP is a demanding tool in terms of resources and time. It should be reserved for material issues, based on stable economic models. But its cost must be put into perspective: for recurring flows, a single agreement can avoid several cycles of checks and prove to be economically beneficial in the medium term.
This approach is recognized internationally. In April 2025, France published a charter governing APA requests. OECD statistics confirm that the volume of cases handled through advance pricing agreements is increasing compared to mutual agreement procedures, reflecting a growing priority given to dispute prevention.
Relationship of trust and rulings: complementary mechanisms
When an APP is not proportionate to the situation, other mechanisms allow security measures to be implemented within a structured framework of dialogue with the administration.
The trust-based relationship mechanisms—tax partnership (launched in 2019) and tax support for SMEs (since 2021)—are based on a logic of enhanced cooperation. Around 100 groups are involved in the tax partnership, and nearly 4,800 SMEs benefit from tax support. These frameworks make it possible to address issues upstream, identify areas of risk and, where necessary, prepare to use the most appropriate formal tools. They do not constitute implicit validation of tax positions or a guarantee that no adjustments will be made.
Tax rulings, meanwhile, do not provide security for transfer pricing policy as such. They help clarify the legal framework upstream—qualification of a permanent establishment, application of a treaty regime, nature of a flow—but reach their limits when the objective is to secure the method of determining intra-group prices itself. In this case, a prior agreement is required.
Under review: managing the financial consequences
When a tax audit is initiated, the logic of security changes. The challenge is no longer to prevent disputes, but to manage their financial effects in a constrained environment.
Article L.62 A of the LPF: neutralizing withholding tax
Article L.62 A of the Tax Procedures Code is the main tool that can be used in transfer pricing matters once an audit has been initiated. It allows companies to partially reduce the financial impact of an adjustment based on Article 57 of the General Tax Code, in return for repatriating the sums in question to France. Its most significant effect is to neutralize the withholding tax applied to deemed distributed income—often one of the most burdensome cash items in this type of adjustment.
In 2024, this procedure was implemented in 53 audits, resulting in accepted increases of €689.3 million and withholding taxes not applied of €97.2 million.
Two structural constraints determine its use:
- Full acceptance of the adjustment in France. Recourse to Article L.62 A of the LPF closes the door to any subsequent challenge to the validity of the adjustment before the domestic courts. It is a conscious trade-off between challenging the merits of the case and controlling the immediate financial impact.
- Activation prior to collection. The mechanism must be triggered within a specific time frame, which means that this decision must be incorporated into the control strategy from the very beginning.
Acceptance of the adjustment in France does not prevent the subsequent initiation of an international mutual agreement procedure to address double taxation abroad.
After recovery: eliminating double taxation
The mutual agreement procedure for transfer pricing (MAP)
When a transfer pricing adjustment is upheld, the Mutual Agreement Procedure (MAP) allows the competent authorities of the States concerned to seek agreement on the allocation of taxing rights. It is provided for in almost all bilateral tax treaties, on the basis of Article 25 of the OECD Model Tax Convention.
From a legal standpoint, MAPs are based on an obligation of means: administrations must strive to reach an agreement, without any formal guarantee of results. However, statistics published by the OECD for 2024 qualify this limitation: approximately 76% of MAPs relating to transfer pricing resulted in the total elimination of double taxation, with an average resolution time of around 31 months.
These delays have concrete implications for groups: cash flow constraints, provisions to be set aside, limited visibility on the resolution timeline, and governance constraints over several financial years.
The publication of MEMAP 2026 by the OECD—the first update since 2007—is a major development in this regard. This manual formalizes best practices identified in the peer reviews of Action 14 of the BEPS project, focusing in particular on the quality of MAP requests, active case management, and transparency on deadlines.
European mechanisms for eliminating double taxation
Within the European Union, the European Arbitration Convention and Directive 2017/1852 offer a higher level of protection: when the competent authorities fail to reach an agreement within the specified time frame, an advisory or arbitration committee is set up to ensure that the dispute is resolved. These mechanisms are based on an obligation of result, unlike conventional MAP.
However, their scope is strictly limited to intra-European situations. For groups whose value chains involve countries outside the EU, the mutual agreement procedure under bilateral agreements remains the main tool.
What this means in practice
Securing transfer pricing is not limited to a single tool. It is based on a sequential assessment of risk: anticipating where possible, arbitrating when an audit is underway, and correcting where double taxation arises.
A prior agreement may seem costly to implement. But for recurring and material flows, it can avoid several cycles of checks—and ultimately prove to be more economically rational than the absence of security measures. Article L.62 A of the LPF is a crisis management tool, not a prevention tool: it requires clear and irreversible arbitration. Amicable procedures are effective, but their timeframe requires advance management in terms of cash flow and provisions.
The effectiveness of a transfer pricing security policy depends less on the list of tools available than on the ability to choose them appropriately and deploy them at the right time.
Marion Aguilar is a transfer pricing lawyer and founder of TeaPea, a firm specializing in transfer pricing based in Marseille.
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