Transfer Pricing and Valuation of Intangible Assets: The French Supreme Administrative Court Opens a Debate about the Weighting of Methods

In its decision of 27 October 2022 in the Sacla case, the French Supreme Administrative Court overturned the lower administrative courts’ decisions in a long-running transfer pricing battle over how to value taxpayers’ brands. Whereas the court-appointed expert witness calculated a weighted average from the results of applying the historical cost-based method and the discounted cash-flow method, the lower courts relied only on the latter method without sufficient reasoning, the French Supreme Administrative Court found. The case at stake went deeply into details in the valuation process. However, the French Supreme Administrative Court only overturned the decision on the grounds of distortion, which means there are still outstanding issues to be tackled.