The ST Dupont case deals with an estimated transfer pricing tax assessment carried out by French tax authorities concerning the sale of goods made by the French entrepreneur to its wholesaler and retailer subsidiary located in Hong Kong. The assessment considered transactions carried out by ST Dupont with third parties located in South Korea and Southeast Asia, yet with questionable comparability adjustments. However, the original transfer pricing policy of the taxpayer was rather flawed and lacked a substantial comparability analysis when applying discounts based on public prices according to the continents where entities were located. On top of that, the French procedural provision kicked in since the taxpayer was not able to deliver a complete transfer pricing documentation during audits. As a result, the whole case is geared towards the failure of ST Dupont to substantiate the poor use of comparables when applying gross margins within the estimated tax assessment in a concretely and effectively manner. Ultimately, the Conseil d’État validated the position of the tax authorities.
