Transfer Pricing for Financial Transactions - Intercompany Loans, Guarantees & Cash Pooling

Introduction

Financial transactions between associated enterprises can present some of the most challenging transfer pricing issues for multinational groups.

Intercompany loans, guarantees, cash pooling and treasury arrangements require more than simply applying an interest rate. Businesses need to consider the commercial rationale for the transaction, accurately delineate the arrangement, assess the borrower's creditworthiness and determine whether the resulting pricing is arm's length.

Delivered by expert speaker Rafaela Oplopoiou-Chapman, this new live and interactive session will provide a practical guide to applying transfer pricing principles to common intra-group financial transactions, drawing on OECD principles and the UK transfer pricing framework.

It is designed for tax advisers, accountants, treasury professionals and in-house tax and finance teams with an existing understanding of basic transfer pricing principles who want to develop their knowledge of this specialist area.

What You Will Learn

This live and interactive session will cover the following:

• Applying transfer pricing principles to financial transactions
• OECD framework for financial transactions
• Accurately delineating the transaction
• Commercial rationale and economic substance
• Debt versus other forms of funding
• Understanding the borrower's and lender's perspectives
• Interaction with the wider transfer pricing analysis
• Intercompany loans
• Establishing an arm's length interest rate
• Credit ratings and creditworthiness
• Standalone versus group credit rating
• Implicit support
• Loan terms and conditions
• Currency, duration and security
• Using comparable uncontrolled transactions
• Practical loan pricing example
• Financial guarantees
• When does a guarantee provide an economic benefit?
• Explicit versus implicit support
• Approaches to pricing guarantee fees
• Identifying comparable arrangements
• Common practical difficulties
• Cash pooling and treasury arrangements
• Understanding cash pooling structures
• Role and remuneration of the cash pool leader
• Short-term versus long-term balances
• Allocating the benefits of cash pooling
• Treasury functions and centralised financing
• Identifying transfer pricing risks
• Documentation and HMRC considerations
• Evidence needed to support financial transactions
• Intercompany agreements
• Benchmarking and supporting analysis
• Common areas of challenge
• Impact of recent UK transfer pricing reforms
• Practical documentation checklist
• Worked case studies

Recording of live sessions: Soon after the Learn Live session has taken place you will be able to go back and access the recording - should you wish to revisit the material discussed.