Menu
  • Locations
  • About Us
  • Services
  • Experts
  • News & Knowledge
  • Hot Topics
  • Culture & Career
  • Locations
  • Search
  • Press
  • Events & Webinars
  • CI Guide
  • Contact
  • Albania
  • Algeria
  • Angola
  • Argentina
  • Armenia
  • Atlas Tax Lawyers
  • Australia
  • Austria
  • Austria | ICON Wirtschaftstreuhand GmbH
  • Bangladesh
  • Belgium
  • Benin
  • Bolivia
  • Bosnia & Herzegovina
  • Botswana
  • Brazil
  • Bulgaria
  • Burkina Faso
  • Burundi
  • Cambodia
  • Cameroon
  • Canada
  • Cape Verde
  • Central African Republic
  • Chad
  • Chile
  • China
  • Colombia
  • Congo Brazzaville
  • Costa Rica
  • Croatia
  • Cyprus
  • Czech Republic
  • Democratic Republic of Congo
  • Denmark
  • Dominican Republic
  • Ecuador
  • Egypt
  • El Salvador
  • Equatorial Guinea
  • Estonia
  • Eswatini
  • Ethiopia
  • Finland
  • France
  • Gabon
  • Gambia
  • Georgia
  • Germany
  • Ghana
  • Gibraltar
  • Greece
  • Guatemala
  • Guinea
  • Guinea-Bissau
  • Honduras
  • Hong Kong
  • Hungary
  • Iceland
  • India
  • Indonesia
  • Iran
  • Iraq
  • Ireland
  • Israel
  • Italy
  • Italy | WTS R&A
  • Ivory Coast
  • Japan
  • Kazakhstan
  • Kenya
  • Korea
  • Kyrgyzstan
  • Laos
  • Latvia
  • Liberia
  • Libya
  • Lithuania
  • Luxembourg
  • Macao
  • Madagascar
  • Malawi
  • Malaysia
  • Mali
  • Malta
  • Mauritania
  • Mauritius
  • Mexico
  • Moldova
  • Montenegro
  • Morocco
  • Mozambique
  • Myanmar
  • Namibia
  • Nepal
  • Netherlands
  • New Zealand
  • Niger
  • Nigeria
  • North Macedonia
  • Norway
  • Pakistan
  • Panama
  • Paraguay
  • Peru
  • Philippines
  • Poland
  • Portugal
  • Puerto Rico
  • Romania
  • Rwanda
  • São Tomé and Príncipe
  • Saudi Arabia
  • Senegal
  • Serbia
  • Seychelles
  • Sierra Leone
  • Singapore
  • Slovakia
  • Slovenia
  • Somalia
  • South Africa
  • South Sudan
  • Spain
  • Sri Lanka
  • Sudan
  • Sweden
  • Switzerland
  • Taiwan
  • Tanzania
  • Thailand
  • Togo
  • Trinidad and Tobago
  • Tunisia
  • Turkey
  • Turkmenistan
  • Uganda
  • UK | FTI Consulting
  • UK | WTS Hansuke
  • Ukraine
  • United Arab Emirates
  • United Arab Emirates | WTS Dhruva Consultants
  • United Kingdom
  • Uruguay
  • USA
  • USA | Frankel Loughran Starr & Vallone LLP (FLSV)
  • USA | GTM Global Tax Management (GTM)
  • USA | VALENTIAM Group
  • Uzbekistan
  • Venezuela
  • Vietnam
  • Wenger Vieli Ltd. | Switzerland
  • WTS Tax Service
  • Zambia
  • Zimbabwe
  • About Us
  • Our Supervisory Board
  • Quality, Process & Risk Management
  • Sustainability & Tax at WTS Global
  • Customs
  • Financial Services
  • Global Mobility
  • Indirect Tax
  • International Corporate Tax
  • Mergers & Acquisitions (M&A)
  • Private Clients & Family Office
  • Sustainability & Tax
  • Tax Certainty & Controversy
  • Tax Technology
  • Transfer Pricing & Valuation
  • Real Estate
  • Digital Tax Law
  • European Tax Law
  • Latest News
  • Brochures
  • Newsletters
  • Surveys & Studies
  • Pillar Two
  • FIT for CBAM
  • Tax Sustainability Index
  • ViDA - VAT in the Digital Age
  • EU WHT Reclaims
  • AI playground
  • Culture and Leadership
  • Diversity
  • WTS Global Academy
  • Career
  • Pillar Two Team
  • Pillar Two - Implementation Status Wordwide
  • Press
  • Events & Webinars
  • CI Guide
  • Contact
WTS worldwide
  • Albania
  • Algeria
  • Angola
  • Argentina
  • Armenia
  • Australia
  • Austria
  • Bangladesh
  • Belgium
  • Benin
  • Bolivia
  • Bosnia & Herzegovina
  • Botswana
  • Brazil
  • Bulgaria
  • Burkina Faso
  • Burundi
  • Cambodia
  • Cameroon
  • Canada
  • Cape Verde
  • Central African Republic
  • Chad
  • Chile
  • China
  • Colombia
  • Congo Brazzaville
  • Costa Rica
  • Croatia
  • Cyprus
  • Czech Republic
  • Democratic Republic of Congo
  • Denmark
  • Dominican Republic
  • Ecuador
  • Egypt
  • El Salvador
  • Equatorial Guinea
  • Estonia
  • Eswatini
  • Ethiopia
  • Finland
  • France
  • Gabon
  • Gambia
  • Georgia
  • Germany
  • Ghana
  • Gibraltar
  • Greece
  • Guatemala
  • Guinea
  • Guinea-Bissau
  • Honduras
  • Hong Kong
  • Hungary
  • Iceland
  • India
  • Indonesia
  • Iran
  • Iraq
  • Ireland
  • Israel
  • Italy
  • Ivory Coast
  • Japan
  • Kazakhstan
  • Kenya
  • Korea
  • Kyrgyzstan
  • Laos
  • Latvia
  • Liberia
  • Libya
  • Lithuania
  • Luxembourg
  • Macao
  • Madagascar
  • Malawi
  • Malaysia
  • Mali
  • Malta
  • Mauritania
  • Mauritius
  • Mexico
  • Moldova
  • Montenegro
  • Morocco
  • Mozambique
  • Myanmar
  • Namibia
  • Nepal
  • Netherlands
  • New Zealand
  • Niger
  • Nigeria
  • North Macedonia
  • Norway
  • Pakistan
  • Panama
  • Paraguay
  • Peru
  • Philippines
  • Poland
  • Portugal
  • Puerto Rico
  • Romania
  • Rwanda
  • São Tomé and Príncipe
  • Saudi Arabia
  • Senegal
  • Serbia
  • Sierra Leone
  • Singapore
  • Slovakia
  • Slovenia
  • Somalia
  • South Africa
  • South Sudan
  • Spain
  • Sri Lanka
  • Sudan
  • Sweden
  • Switzerland
  • Taiwan
  • Tanzania
  • Thailand
  • Togo
  • Trinidad and Tobago
  • Tunisia
  • Turkey
  • Turkmenistan
  • Uganda
  • Ukraine
  • United Arab Emirates
  • United Kingdom
  • Uruguay
  • USA
  • Uzbekistan
  • Venezuela
  • Vietnam
  • Zambia
  • Zimbabwe
  • About Us Clothing
    • About Us
    • Our Supervisory Board
    • Quality, Process & Risk Management
    • Sustainability & Tax at WTS Global
    WTS Global -- Locally rooted -- Globally connected

    Here you will find more information on our organization’s structure, experts and global reach.

  • Services Clothing
    • Customs
    • Financial Services
    • Global Mobility
    • Indirect Tax
    • International Corporate Tax
    • Mergers & Acquisitions (M&A)
    • Private Clients & Family Office
    • Sustainability & Tax
    • Tax Certainty & Controversy
    • Tax Technology
    • Transfer Pricing & Valuation
    • Real Estate
    • Digital Tax Law
    • European Tax Law
    Our Global Services

    Learn more about our network partners and their services.

  • Experts
  • News & Knowledge Clothing
    • Latest News
    • Brochures
    • Newsletters
    • Surveys & Studies
    News & Knowledge

    Welcome to WTS Global Insights. Here you will find news and updates from our worldwide network.

  • Hot Topics Clothing
    • Pillar Two
      • Pillar Two Team
      • Pillar Two - Implementation Status Wordwide
    • FIT for CBAM
    • Tax Sustainability Index
    • ViDA - VAT in the Digital Age
    • EU WHT Reclaims
    • AI playground
    Hot Topics

    Overview of the current "Hot Topics" in the tax industry and how we can support with individual questions.

  • Culture & Career Clothing
    • Culture and Leadership
    • Diversity
    • WTS Global Academy
    • Career
    Culture and Leadership

    WE PLAY DIFFERENT.

    Career

    Join the game-changers.

  • Locations
  • Search
05.10.2020

Impact of the crisis on transfer prices

Postponement of the annual filing of the transfer pricing policy

Companies exceeding given turnover thresholds, or belonging to the same multinational enterprise (“MNE”), must electronically apply a special file that consists of a simplified and recapitulative version of the standard transfer pricing (“TP”) documentation (Master file (“MF”) and Local file (“LF”)).

In principle, this tax return filing must be sent to the French tax authorities within 6 months after the filing of the corporate income tax (“CIT”) return.

However, to take into account the postponement of the deadline for filing the tax return for companies facing difficulties due to the health crisis, the French tax authorities have specified that this filing may exceptionally be filed at the latest 31 December 2020 (for the financial year ending 31 December 2019).

COVID-19: amendments to 2020 Master and Local Files

The economic impact of the health crisis involves fairly significant changes in the implementation of the transfer pricing policies of MNEs. The documentation must be adapted accordingly to justify these changes in the event of a tax audit.

Consolidated profits could decrease in 2020 and in the coming years for some industries, and such a decrease could also be observed in the independent companies’ results that are used as a comparable to test the arm’s length nature of intra-group transactions.

So as to determine the remuneration to be allocated to intra-group entities, and in application of the transactional net margin method, groups carry out research of independent comparable companies (benchmark studies) in order to determine the arm’s length margin ranges. However, this research is necessarily based on the use of historical financial data since there is a time lag between the time the accounts are approved and the availability of this information. As a matter of fact, the tested party will measure the controlled transactions made in the financial years (“FYs”) affected by COVID-19, comparing with results of selected comparables, but scored in the pre-COVID-19 periods. Such objective discrepancy gives rise to the question as to whether or not the traditional comparability practices are still applicable for 2020.

It is a matter of fact that MNEs will need treasury to re-load their activities. In the framework of Base Erosion and Profit Shifting (“BEPS”) Action 4, France introduced limits to the deductions of interest. Interest accrued by a French corporation in relation with borrowings from its direct shareholders may be deducted only if the interest rate does not exceed the average interest rate on loans with an initial duration of more than two years granted by banks to French companies or a higher rate if it can be demonstrated that this rate would be at arm’s length. The figure as at 20 May 2020 is 1.31%.

Effective 1 January 2019, in line with the implementation of the ATAD 1 rules, interest deduction is further limited.

With effect from 1 January 2019, interest deduction is generally limited to EUR 3 million or 30% of adjusted taxable profits. Where a company is thin-capitalised (i.e. the company has a debt-to-equity ratio exceeding 1.5/1), these limits are reduced to EUR 1 million or 10% of adjusted taxable profits (article 212 bis of the CGI).

Also, interest deduction limitation rules have been deemed to be unsustainable in macro crisis periods. COVID-19 is going to hit MNE also below the earnings before interest and tax (“EBIT”) line, indeed:

  • Enterprises scoring operating losses or small operating profits can bear lower interest expenses. Such limitation is in contradiction with the companies’ need for additional liquidity to reload their operations.
  • Increasing debts and equities eroded by losses will affect the debt equity ratios generating additional not-deductible interest in those countries with D/E deduction rules.
  • Downsizing of turnover, margin and profits as well as an increase of D/E ratios could determine a worsening of the credit rating, and an additional interest burden as well as the application of the default conditions in main financing agreements.

Action must be taken now!

Newsletter Transfer Pricing

With this newsletter, we inform multinational companies on country-specific and international legislative documents and regulations.

Subscribe now
Article published in TP Newsletter 2/2020
Transfer Pricing Newsletter: Update on the recent news and cases in 13 countries
View publication
Articles you might be interested in

Non-EU businesses need a fiscal representative to trade in Hungary. Fiscalrep.hu is the official new website created to to facilitate a transparent, secure, and fully compliant market entry into Hungary.

Hungary: Fiscal representation at WTS Klient - fiscalrep.hu is now live
Read more

Explore the new article by WTS Cyprus, which summorizes pre-existing and new tax rules on low-tax and blacklisted juristictions in Cyprus.

Cyprus: Cyprus Tightens Tax Rules on Low-Tax and Blacklisted Jurisdictions
Read more

From September 2025, NAV will reclassify 21 invoice validation warnings as errors, leading to failed reporting. Businesses must update systems to avoid tax risks under Hungary’s stricter rules.

Hungary: Update - Failed data reporting in the Hungarian online invoice system
Read more

Get in contact

If you have any questions about WTS Global or our global services, please get in touch.
We will respond to you as soon as possible.

Contact
About Us
  • About Us
  • Our Supervisory Board
  • Quality, Process & Risk Management
Services
  • Customs
  • Financial Services
  • Global Mobility
  • Indirect Tax
  • International Corporate Tax
  • Mergers & Acquisitions (M&A)
  • Private Clients & Family Office
  • Sustainability & Tax
  • Tax Certainty & Controversy
  • Tax Technology
  • Transfer Pricing & Valuation
Latest News
  • News & Knowledge
  • Brochures
  • Newsletters
  • Newsletter Subscription
  • Surveys & Studies
Hot Topics
  • Pillar Two
  • Digital Tax Law
  • European Tax Law
Culture & Career
Exclusive Cooperation With
© 2024 WTS Company Information Data Protection Disclaimer