The "Arrow" judgment delivered by the CAA of Lyon this week reminds us that if the burden of proof in terms of transfer pricing shifts more and more from the administration to the taxpayer, the service must nevertheless be careful to choose its angle of attack, specifically in the In that case, the administration had challenged the royalties paid by the French company Arrow to its parent company and its sister company established abroad under the sub-concession of IP rights relating to technical files, allowing the filing of marketing authorisations.

More specifically, the service considered in particular that the company's success lay in the development of its commercial network and that therefore, the payment of royalties based on its turnover led to depriving it of the fruits of its efforts.

In rejecting the administration's claims, the CAA considers that "if the Minister submits that [...] The royalties paid deprive it of the return on investment to which it would be entitled by reason of the activity it carries out, such an argument does not call into question the existence of the services rendered in return for the royalties at issue but, where appropriate, only the excessive nature of the royalties paid, which therefore do not constitute an advantage by nature granted by a company established in France".

In order to base its corrections, it would therefore have been necessary for the service (i) to demonstrate the absence of object or benefit derived from the rights granted, for the French company or (ii) to demonstrate that the rate charged was overvalued, based on economic analyses.

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