A German-headquartered global market leader of certain industrial equipment experienced an unfavorable transfer pricing adjustment in a French tax audit, with the potential tax impact exceeding 30 million euro. A team from NERA was selected by the group headquarters to work hand-in-hand with French tax and legal advisors to avert this outcome.

During the first step of the appeals process, the NERA team developed an independent economic analysis rebutting the findings of the French tax authorities. We found the analysis of the French tax authorities arbitrarily flawed on different formal and economic principle matters. We were able to quantify the impact of correcting the errors made by French tax authorities. Correcting all the errors showed that, in fact, the French subsidiary has effectively earned quite well from intragroup transactions with the German parent company and that there is no valid case for any transfer pricing adjustment.

We will advise the client together with the selected French counsel in the ongoing dispute resolution process.