An advantage of a cash pooling arrangement may be the reduction of interest paid or the increase of interest received, which results from netting credit and debit balances. The amount of that group synergy benefit, calculated by reference to the results that the cash pool members would have obtained had they dealt solely with independent enterprises, would generally be shared by the cash pool members, provided that an appropriate reward is allocated to the cash pool leader for the functions it provides in accordance with C.2.3.
TPG2020 Chapter X paragraph 10.121
Category: C. Treasury function, C.2. Cash pooling, OECD Transfer Pricing Guidelines (2017), TPG2020 Chapter X: Financial Transactions | Tag: Cash pool, Delineation, Financial benefit, Financial transactions, Group synergies, Synergies, Treasury functions
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Next » Related Guidelines
- TPG2022 Chapter X paragraph 10.122Another key consideration in analysing intra-group funding arrangements which might be described as cash pooling are situations where members of an MNE group maintain debit and credit positions which, rather than functioning as part of a short-term liquidity arrangement, become more long term....
- TPG2022 Chapter X paragraph 10.144Eventually, the remuneration of the cash pool members will depend upon the specific facts and circumstances and the functions, assets and risks of each of the pool members. Therefore, this guidance does not intend to provide a prescriptive approach for allocating the cash...
- TPG2022 Chapter X paragraph 10.125Before any attempt is made to determine the remuneration of the cash pool leader and participants, it is central to the transfer pricing analysis to identify and examine under Chapter I guidance the economically significant risks associated to the cash pooling arrangement. These...
- TPG2022 Chapter X paragraph 10.127Credit risk refers to the risk of loss resulting from the inability of cash pool members with debit positions to repay their cash withdrawals. From the cash pool leader’s perspective, there needs to be a probability for it to incur losses derived from...
- TPG2022 Chapter X paragraph 10.146It is expected that all cash pool participants will be better off than in the absence of the cash pool arrangement. Under prevailing facts and circumstances that could imply, for instance, that all cash pool participants would benefit from enhanced interest rates applicable...
- TPG2022 Chapter X paragraph 10.131Where accurate delineation of the actual transactions determines that a cash pool leader is carrying on activities other than coordination or agency functions, the pricing of such transactions would follow the approaches included in other parts of this guidance, as appropriate....
- TPG2022 Chapter X paragraph 10.138Company T, a member of MNE Group Y, performs as the MNE group treasury entity and undertakes a range of different financial transactions both intra-group and externally. Company T’s main purpose is to provide treasury services to the other entities within the MNE...
- TPG2022 Chapter X paragraph 10.130In general, a cash pool leader performs no more than a co-ordination or agency function with the master account being a centralised point for a series of book entries to meet the pre-determined target balances for the pool members. Given such a low...
- 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...