In considering whether controlled and uncontrolled transactions are comparable, regard should be had to all the factors which may affect the guarantee fee including: the risk profile of the borrower, terms and conditions of the guarantee, term and conditions of the underlying loan (amount, currency, maturity, seniority etc.), credit rating differential between guarantor and guaranteed party, market conditions, etc. When available, uncontrolled guarantees are the most reliable comparable to determine arm’s length guarantee fees.
TPG2020 Chapter X paragraph 10.171
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By OECD
Category: OECD Transfer Pricing Guidelines (2017) | Tag: Comparable uncontrolled price method (CUP), Financial guarantee, Financial transactions, Pricing guarantees, Treasury functions
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