Under what circumstances can I apply for a mutual agreement procedure or request an advance pricing arrangement ?

Mutual agreement procedure

You can apply for a mutual agreement procedure (MAP) if you are subject to double taxation or if you believe that your income has been taxed in breach of a bilateral tax convention.

Double taxation may take two forms:

1. Legal, i.e. you are taxed on the same income in two States

2. Economic, i.e. when taxation of the income of a taxpayer in one State duplicates taxation of the income of another taxpayer who is related to the first in another State. This is particularly common for the transfer of profits between companies belonging to the same group

You can however only apply for a MAP for taxes referred to in the “Taxes covered” article of the relevant convention.

Advance pricing arrangement

You can request an advance pricing arrangement (APA) when there are international transactions between a French entity and a foreign entity within your group.

These arrangements are intended to apply, in particular, when the implementation of arm’s length principles raises major issues concerning reliability and accuracy, or when the specific conditions in which the transactions are carried out are unusually complex.

The APA procedure is cumbersome and time-consuming, and is essentially intended for multinationals.

As a result, before requesting an APA, you should check that the expected benefits are not outweighed by the resources you would have to mobilise.