TPG2022 Chapter X paragraph 10.23

Category: B. Interaction with the guidance in Section D.1 of Chapter I, TPG2022 Chapter X: Transfer pricing aspects of financial transactions | Tag: , , , ,
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In accurately delineating the actual financial transaction, a functional analysis is necessary. This analysis seeks to identify the functions performed, the assets used and the risks assumed by the parties to that controlled transaction.






Related Guidelines

  1. TPG2022 Chapter X paragraph 10.27In some instances, the functions of the lender and the borrower may be undertaken by the same entity in different transactions. That could be the case, for example, of centralised treasury activities within an MNE group where the treasury entity raises and provides...
  2. TPG2022 Chapter X paragraph 10.26From the perspective of the borrower, the relevant functions would usually refer to ensuring the availability of funds to repay the principal and the interest on the loan in due time; providing collateral, if needed; and monitoring and fulfilling any other obligation derived...
  3. TPG2022 Chapter X paragraph 10.25When, under accurate delineation, the lender is not exercising control over the risks associated to an advance of funds, or does not have the financial capacity to assume the risks, such risks should be allocated to the enterprise exercising control and having the...
  4. TPG2022 Chapter X paragraph 10.24For instance, in the particular case of an intra-group loan, the key functions performed by a lender to decide whether and under which terms to advance funds would typically include an analysis and evaluation of the risks inherent in the loan, the capability...
  5. TPG2022 Chapter IX paragraph 9.18The accurate delineation of the transactions comprising the business restructuring requires performing a functional analysis that seeks to identify the economically significant activities and responsibilities undertaken, assets used or contributed, and risks assumed before and after the restructuring by the parties involved. Accordingly,...
  6. TPG2022 Chapter X paragraph 10.37For example, consider that Company A, a member of AB Group, advances funds with a term of 10 years to an associated enterprise, Company B, which will use the funding for short-term working capital purposes. This advance is the only loan in Company...


Related Case Law

  1. Spain vs “X Iberica SA”, October 2019, TEAC, Case No Rec. 6537/2017“X Iberica SA” is a Spanish subsidiary of a multinational group and also a participant in the group’s cash pooling system, both as a borrower and as a provider of funds. When the group is not able to finance itself, the vehicle called...
  2. Spain vs “XZ SA”, March 2022, TEAC, Case No Rec. 4377-2018“XZ SA” is a Spanish parent of a tax consolidation group which is part of a multinational group. The Spanish group participates in the group’s cash pooling system, both as a borrower and as a provider of funds. The objective of cash pooling...
  3. Spain vs Bunge Iberica SA, March 2023, Audiencia Nacional, Case No SAN 2118/2023 – 113/2020 -ECLI:ES:AN:2023:2118Bunge Iberica SA participates in the Group’s cash pooling system, both as a borrower and as a provider of funds. The tax authorities had issued a notice of assessment in which the interest rates on deposits and withdrawals were adjusted and determined on...
  4. Spain vs Bunge Iberica SA, July 2025, Supreme Court, Case No SAN 3721/2025 – ECLI:ES:TS:2025:3721Bunge Iberica SA participated in its group's cash pooling arrangement as both borrower and fund provider. Spanish tax authorities adjusted deposit and withdrawal interest rates symmetrically using a group credit rating. After rejections by the Tax Court in 2019 and the National Court...
  5. Poland vs “Fish Factory” sp. z o.o., April 2023, Supreme Administrative Court, II FSK 2636/20The activity of Spółka A sp. z o.o. included salmon breeding, processing, smoking and sale and distribution of the finished products. The company operated within Group A with head quarter in the Netherlands. By decision of 27 May 2019, the tax authorities determined...