If the lender in a loan or advance transaction to which paragraph (a)(2) of this section applies is regularly engaged in the trade or business of making loans or advances to unrelated parties, the safe haven rates prescribed in paragraph (a)(2)(iii)(B) of this section shall not apply, and the arm’s length interest rate to be used shall be determined under the standards described in paragraph (a)(2)(i) of this section, including reference to the interest rates charged in such trade or business by the lender on loans or advances of a similar type made to unrelated parties at and about the time the loan or advance to which paragraph (a)(2) of this section applies was made.
§ 1.482-2(a)(2)(iii)(D) Lender in business of making loans.
Category: (a) Loans or advances, Transfer Pricing Guidelines, US IRC Section 482 on Transfer Pricing, § 1.482-2 Determination of taxable income in specific situations. | Tag: Applicable Federal rate, Financial transactions, Interest, Interest rate, Intra-group loan, Loan, Safe harbour interest rates, Safe haven interest rate
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Next » Related Guidelines
- TPG2022 Chapter X paragraph 10.14In determining the arm’s length conditions of financial transactions, the same principles apply as described in Chapters I-III of these Guidelines for any other controlled transaction....
- TPG2022 Chapter X paragraph 10.92In the search for comparability data, a comparable is not necessarily restricted to a stand-alone entity. In examining commercial loans, where the potentially comparable borrower is a member of an MNE group and has borrowed from an independent lender, provided all other economically...
- TPG2022 Chapter I paragraph 1.186Under these circumstances the interest rate charged on the loan by T to S is an arm’s length interest rate because (i) it is the same rate charged to S by an independent lender in a comparable transaction; and (ii) no payment or...
- TPG2022 Chapter X paragraph 10.58Borrowers seek to optimise their weighted average cost of capital and to have the right funding available to meet both short-term needs and long-term objectives. When considering the options realistically available to it, an independent business seeking funding operating in its own commercial...
- TPG2022 Chapter X paragraph 10.98One consideration to be kept in mind with the cost of funds approach is that it should be applied by considering the lender’s cost of funds relative to other lenders operating in the market. The cost of funds can vary between different prospective...
- TPG2022 Chapter X paragraph 10.60Macroeconomic circumstances may lead to changes in the financing costs in the market. In such a context, a transfer pricing analysis with regard to the possibilities of the borrower or the lender to renegotiate the terms of the loan to benefit from better...
- TPG2022 Chapter X paragraph 10.88The following paragraphs present different approaches to pricing intra-group loans. As in any other transfer pricing situation, the selection of the most appropriate method should be consistent with the actual transaction as accurately delineated, in particular, through a functional analysis (see Chapter II)....
- TPG2022 Chapter X paragraph 10.93Arm’s length interest rates can also be based on the return of realistic alternative transactions with comparable economic characteristics. Depending on the facts and circumstances, realistic alternatives to intra-group loans could be, for instance, bond issuances, loans which are uncontrolled transactions, deposits, convertible...
- United Arab Emirates issues comprehensive Transfer Pricing Guide23 October 2023, the United Arab Emirates issued a comprehensive practical Transfer Pricing Guide. The guide is designed to provide general guidance on the Transfer Pricing regime in the UAE with a view to making the provisions of the Transfer Pricing regulations as...
- Transfer Pricing in the Mining IndustryLike other sectors of the economy, there are base erosion and profit shifting risks in the mining sector. Based on the ongoing work on BEPS, the IGF (Intergovernmental Forum on Mining) and OECD has released guidance for source countries on transfer pricing in...
Related Case Law
- Greece vs “SH Loan Ltd”, May 2019, Court, Case No A 1780/2019“SH Loan Ltd” had provided a loan to its shareholder/manager and claimed that it did not expect any profit (interest) from this transaction, since it was not a bank. The tax authorities issued an assessment where additional interest income was added to the...
- Poland vs “Shopping Centre Developer sp.k.”, June 2022, Supreme Administrative Court, Case No II FSK 3050/19A Polish company, “Shopping Centre Lender sp.k.”, had been granted three intra group loans in FY 2013 for a maximum amount of EUR 2 million, EUR 115 million and EUR 43.5 million. The interest rate on the loans had been set at 9%....
- Philippines vs Yi Wine Club, Inc., December 2017, Tax Court, CTA CASE No. 8809In this case, the tax authorities had issued an assessment to Yi Wine Club, Inc. where interest on an interest free loan extended to its affiliates had been imputed and added to the taxable income, pursuant to Section 50 of the National Internal...
- Liechtenstein vs A Trust, February 2018, Administrative Court, Case No VGH 2017/126A Trust submitted a tax return for 2014 in which an asset loan to C Trust in the amount of USD 5,393,695 (GBP 3,459,175) and a liability loan to the D Trust in the amount of USD 7,715,134 (GBP 4,948,000) had been declared....