APA Procedure Consolidated by Introduction of Unilateral APAs

Interest in the advance pricing agreement (APA) procedure has increased gradually since its introduction in 1999 by way of a mere statement of practice. By the end of 2004 more than 30 applications had been filed. The French tax authorities, which are encouraging APAs to be conducted, are expecting an annual average of 20 applications.

The APA procedure was introduced by way of an administrative instruction which provided only for bilateral APAs.¹ This instruction was based on the mutual agreement procedure clause of the double tax treaties, which provides for the competent tax authorities of the two contracting states to agree on measures to eliminate double taxation - in accordance with Article 25 of the Organization for Economic Cooperation and Development (OECD) Model Convention. In France, unlike in most other OECD member countries, the authorization to agree on an APA was therefore not based on internal legislation. In formal terms, French APAs