France vs SAS Roger Vivier: TRANSFER PRICING CASE
The Full Summary is published The Academy of Tax Law:
Case Information:
Judgment Summary
The Cour Administrative d’Appel de Paris upheld significant portions of the tax adjustments imposed on SAS Roger Vivier Paris (RVP) for the years 2012–2014. The French tax authorities argued that RVP, as part of a group involving foreign parent entities and related companies, engaged in practices leading to profit transfers inconsistent with the arm’s length principle as outlined in Article 57 of the French General Tax Code. The adjustments addressed insufficient re-invoicing for brand promotion expenses, failure to apply appropriate margins, and substantial discounts on unsold inventory returned to its supplier, Tod's.
The tax authorities applied the transactional net margin method (TNMM), referencing 43 comparable independent companies operating in the luxury distribution sector, and determined that RVP's profit margins were significantly below arm's length benchmarks. The authorities rejected RVP's arguments that its practices, such as a 65% discount on unsold goods and limited re-invoicing for promotional costs, reflected industry norms or market conditions. RVP’s reliance on alternative tax provisions and interpretations from the French tax code was also dismissed.
Key findings included:
Penalties of 40% were upheld for deliberate non-compliance, with the court noting that RVP’s lack of transfer pricing documentation and repeated underreporting indicated intentional tax evasion.
The court also addressed procedural objections raised by RVP, including the handling of tax loss carryforwards and the choice of comparables, concluding that the authorities acted within the scope of the law.
This judgment has far-reaching implications for multinationals operating in France, particularly those in the luxury sector. It reinforces the importance of comprehensive transfer pricing documentation, adherence to the arm’s length principle, and proactive engagement in risk management processes.
READ THE REST OF THE SUMMARY HERE (INCLUDING ALL THE POINTS BELOW):
Key Points of the Judgment
1. Background
2. Core Dispute
3. Court Findings
4. Outcome
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Transfer Pricing Method Used
Major Issues or Areas of Contention
Was This Decision Expected or Controversial?
Significance for Multinationals
Significance for Revenue Services
Similar Cases for Review
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