Although there are two basic types of cash pooling arrangements – physical and notional – other variations and combinations may be arranged to meet specific business needs. For example, a number of physical pools might be held, one for each currency in which the business operates, along with a notional pool which then combines those individual currency pools.
TPG2020 Chapter X paragraph 10.111
Category: C. Treasury function, C.2. Cash pooling, OECD Transfer Pricing Guidelines (2017), TPG2020 Chapter X: Financial Transactions | Tag: Cash pool, Financial transactions, Treasury functions
« Prev |
Next » Related Guidelines
- TPG2022 Chapter X paragraph 10.112In a typical physical pooling arrangement, the bank account balances of all the pool members are transferred daily to a single central bank account owned by the cash pool leader. Any account in deficit is brought to a target balance (usually zero) by...
- TPG2022 Chapter X paragraph 10.134M sets up an intra-group cash pooling arrangement with an unrelated bank. Legal arrangements are put in place for all participants which allow transfers to or from M’s cash concentration account to meet a specified target balance for each pool participant....
- TPG2022 Chapter X paragraph 10.148These cross-guarantees and set-off rights are a feature of an arrangement which would not occur between independent parties. Each guarantor is providing a guarantee for all members of the pool but will not have control over membership of the pool, has no control...
- TPG2022 Chapter X paragraph 10.115The accurate delineation of the cash pooling transactions will depend on the particular facts and circumstances of each case. As cash pooling is not undertaken regularly, if at all, by independent enterprises, the application of transfer pricing principles requires careful consideration. As paragraph...
- TPG2022 Chapter X paragraph 10.113In a notional cash pool, some of the benefits of combining credit and debit balances of several accounts are achieved without any physical transfer of balances between the participating members’ accounts although the bank will usually require cross-guarantees from pool participants to enable...
- TPG2022 Chapter X paragraph 10.114With no physical transfers of funds, the transactional costs of operating a notional pool are likely to be less than transactional costs of operating a physical pool. Functions carried out by the bank would be accounted for in the charges or interest rate...
- TPG2022 Chapter X paragraph 10.135Under the cash management services agreement the bank makes any transfers necessary to meet the target balance for each pool participant with any net surplus deposited by M or any net overdrawn position being met by the bank lending to M. The facility...
- TPG2022 Chapter X paragraph 10.117The cash pool member is likely to be participating in providing liquidity as part of a broader group strategy, an arrangement in which the member can have a credit or debit position, which may include among its aims a range of benefits that...
- Marketing and Procurement Hubs – Tax AvoidanceThe Australian Taxation Office has issued new guidance for multinational groups using offshore marketing- and procurment hubs for tax avoidance purposes. The guidance adresses tax schemes where MNEs uses offshore hubs to shift profits and thereby avoid Australian taxes. Offshore hub arrangements are...
- OECD Report, Making Dispute Resolution Mechanisms More Effective, Action 14 – 2015 ReportOECD (2015), Making Dispute Resolution Mechanisms More Effective, Action 14 – 2015 Report, OECD/G20 BEPS Project, After two years of work, the 15 actions have now been completed. All the different outputs, including those delivered in an interim form in 2014, have been...
Related Case Law
- Poland vs CP Corp, September 2016, Supreme Administrative Court, Case No. II FSK 2299/14A Polish company were planning to enter into a inter-group cash pooling agreement. The cash pooling operation were to be managed by a foreign bank, which would open a group account as a basic account for Norwegien parent company, the pool leader. The...
- Poland vs Cash Pool Corp, Warsaw Administrative Court, Case no II-FSK-1518-13In a request for a binding ruling, a Polish Company indicated that it was joining an inter-group Cash Pooling Agreement (“Agreement”) in which the leader was based in Luxembourg. Under the Agreement, the pool leader acts as a regional financial center and consolidates...
- Switzerland vs. A GmbH, 7 Dec. 2016, Administrative Court, Case No. SB.2016.00008The distinction between cash pool receivables and long-term loans. A GmbH is a group company of the global A-group. The A Group also includes company F Ltd, which is responsible for the global treasury and cash pooling of the A Group. In 2008,...
- Switzerland vs Corp, Oct. 2014, Federal Supreme Court, Case No. 4A_138-2014Decision on the criteria for the arm’s length test of interest rates on inter-company loans. This case i about intercompany loans created by zero balancing cash pooling and the funding of group companies by a group finance company. The Swiss Federal Supreme Court...