Mazars Tax Newsletter - OECD transfer pricing guidelines on financial transactions (Part I: Intra-Group Loans)

The Organization for Economic Co-operation and Development (OECD) has released in February 2020 the final Transfer Pricing Guidance on Financial Transactions ("Guidance"). This is the first time that multinational enterprise (MNE) groups are provided with guidelines on how to structure and price intra-group financial transactions. Read on to find out the developments affecting Intra-Group Loans in our February 2022 newsletter.

The OECD's Guidance provides an insight on the arm’s length treatment of various financial transactions among related parties. The Guidance has been published as a follow up guidance in relation to Base Erosion and Profit Shifting ("BEPS") Action 4 and Actions 8-10. Sections A- E of the Guidance will be added as a new Chapter X of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations ("OECD TPG"), whereas the guidance on the determination of risk-free and risk-adjusted rates of return (Section F) will be included in Chapter I of the OECD TPG.

Given that that Guidance was the first time that multinational enterprise (MNE) groups are provided with guidelines on how to structure and price intra-group financial transactions, we will focus on accurate delineation of the transactions and intra-group loans, in this newsletter. The discussion on treasury functions would be covered in part II.

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TP Newsletter Part I Intra Group Loans
TP Newsletter Part I Intra Group Loans