The Court of Auditors published this Thursday a summary on the tax treaties of France. It calls for quantifying the impact of negotiations at the OECD on the fight against tax optimization of multinationals.

The Court of Auditors calls for

While waiting to publish its assessment of the amount of fraud, the Court of Auditors has just looked, in a summary published this Thursday, on the evolution of international tax conventions, decisive in the fight against tax optimization. France has a dense network of 121 tax treaties which determine the rules for taxing economic flows between it and its partners. Since the start of work at the OECD in 2013, Paris has renegotiated several conventions, with Luxembourg in particular, and ratified the multilateral tool making it possible to integrate the recommendations of the OECD. Other developments are to be expected, while negotiations on digital taxation could lead to a new distribution of the rights to be imposed.

In this context, the Court invites “A solid assessment of the economic impact of the negotiations”. Clearly, it considers that France should quantify more precisely the possible losses of taxable base compared to the potential gains. “The issues raised by the evolution of international tax rules would benefit from being better informed by economic analysis”, she warns in this summary, noting that at present, “The legal aspects take precedence over the economic dimension, even when the commercial and financial flows are very important. “

Quantified evaluation

When France ratified the OECD multilateral instrument in 2018, this expertise was lacking. Parliamentarians debated this highly technical tool without having a quantified assessment of its impact on the taxable base. At the time, the French Association of Private Enterprises, which represents large groups, raised the risk that large groups, particularly in the construction industry, would see some of their establishments abroad reclassified as permanent establishments.

The Court of Auditors issues this warning, while the rules of international taxation could experience new developments at the OECD in the context of work on digital taxation. There is talk of the country of consumption taking more weight compared to the country where the head office is located. ” France […], given the number of head offices of exporting companies present in its territory, would not necessarily benefit from a new general definition applying to all sectors’, warns the Court of Auditors. The “Sages” recommend entrusting an assessment to a unit made up of experts from the tax administration, the Treasury, the Banque de France, or even INSEE.