France: Multinational entity agrees to pay over €1.245 billion to resolve cross-border controversy

Allegation that multinational entity had transferred fees it received from its French franchises to an entity in Luxembourg

Multinational entity agrees to pay over €1.245 billion

The President of the Paris Court of Justice validated a “legal agreement in the public interest” (convention judiciaire d’intérêt public—CJIP) between a U.S. headquartered multinational corporate entity and the French financial public prosecutor, with the multinational corporate group and its French group members agreeing to pay over €1.245 billion to settle the litigation.

A release (French) [PDF 79 KB] from the court reveals that the agreement between the taxpayer and the French administration was concluded in May 2022 but only validated in June 2022.

As has been widely reported, at issue in this matter was an allegation that the multinational entity had transferred fees it received from its French franchises to an entity in Luxembourg, allowing it to reduce its French tax liability. The case was initiated after a preliminary investigation was launched by the French authorities in January 2016.

The court’s release notes that this is the tenth CJIP signed to resolve similar cross-border tax controversies.

 

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