Cross-border advisory
Two administrations look at the same flow differently.
A brand royalty, a head-office recharge, an intra-group loan: every flow between the French subsidiary and the group is a cost on one side and income on the other. We document the French side and talk to your adviser across the border in their own terms.
What it coversWhat gets challenged is rarely the amount.
Reassessments on intra-group flows rarely turn on the arithmetic. They turn on the justification: why this royalty, for what service delivered, at what price a third party would have paid for it. A head-office recharge with no identifiable benefit, a brand royalty with no registered mark, an intra-group loan with no reasoned rate: those are the cases that keep coming back.
The other standing subject is the fixed establishment. An employee working from home, an agent who negotiates, a site that runs on: a presence in France can arise without anyone having set up a company. And the VAT answer does not necessarily match the corporate income tax answer.
We prepare the French documentation, write the positions down and stand behind them in an audit. We are present in France and in Germany, and dealing with your adviser on the other side is part of the engagement. We work in French, German and English.
What it covers
The subjects that do not fit inside one country.
Transfer pricing
Local documentation, its consistency with the group master file and the economic case for each flow, written before the request arrives.
Fixed establishment
We look at the human and technical resources actually present and at the authority to conclude contracts. The VAT answer and the income tax answer can part company.
Tax treaty
Applying the treaty between France and the state of the head office, allocating the right to tax and relieving the double charge.
Withholding taxes
Dividends, interest and royalties paid to the parent, with the formalities on which the reduced rate depends. They have to be in place before the payment.
VAT on cross-border flows
Classifying the transactions, the reverse charge, chain transactions and the VAT consequences of a year-end transfer pricing adjustment.
Corresponding adjustments
A corresponding adjustment in the state that did not follow, and the mutual agreement procedure where both administrations hold their positions.
Posting and social security
The “A1” certificate, the “SIPSI” declaration and non-resident company officers, where the social answer and the tax answer are settled separately. See payroll and HR
Frequently asked
On flows, presence and people.
The questions foreign groups ask most often when dealings with the French subsidiary start to grow.
Intra-group flows
At what point do transfer prices have to be documented?
The formal obligation depends on thresholds and on group membership. Regardless of the threshold, the authorities can ask for the flows to be justified during an audit, and by then it is too late to write it.
How do you justify a head-office recharge?
Through the service, not through the allocation key. You have to be able to say what the subsidiary received, what it gains from it, and why it would have bought the same thing at that price from a third party. The key comes afterwards, and it should stay stable from year to year.
Does a year-end adjustment have VAT consequences?
Often it does, and that is the part most easily missed. Depending on whether the adjustment attaches to identifiable transactions or corrects an overall margin, it may trigger a VAT correction or stay outside the scope. That classification belongs before the entry rather than after it.
Presence and people
Does an employee working from home in France create a fixed establishment?
It depends on what they do and for how long. Someone who negotiates and brings the deal home weighs heavily; someone in a support role weighs less.
The question arises separately for VAT and for corporate income tax, and the answer should be written down as the situation is set up, not later.
Does the “A1” certificate settle the tax question too?
No. The “A1” concerns social security affiliation. Taxing the salary follows the tax treaty and its own criteria, including the length of stay and who ultimately bears the cost of the pay. The two answers can diverge for the same person.
What if the two administrations disagree?
A corresponding adjustment is claimed in the state that did not follow. Failing that, the treaty opens a mutual agreement procedure between the two administrations. It takes time, and its raw material remains the documentation prepared at the time of the events.
What goes with it
What the positions rest on.
Next
List your flows with the group.
We will say which ones hold.
The list of recharges, royalties and loans with the group, plus the most recent documentation, is enough to see what would survive an audit. We work in French, German and English.
- FRADECO SAS · Paris
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50, Rue Chapon · 75003 Paris
+33 1 40 09 13 77 - FRADECO GmbH · Bonn
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Simrockstr. 92 · 53619 Rheinbreitbach
+49 2224 123 14 83