The following examples illustrate the principles described above.
TPG2022 Chapter X paragraph 10.132
Posted on | By OECD
Category: OECD Transfer Pricing Guidelines (2022), TPG2022 Chapter X: Transfer Pricing Aspects of Financial Transactions | Tag: Cash pool, Cash pool leder, Financial transactions, Pricing cash pool transactions, Treasury functions
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- TPG2022 Chapter X paragraph 10.142It should be borne in mind that the other group members which transact with T would still only do so if this left them no worse off than their next best option....
- TPG2022 Chapter X paragraph 10.141Accordingly, T should be compensated for the functions it performs and the risks it assumes in accordance with the guidance in Section C.1. This may include earning part or all of the spread between the borrowing and lending positions which it adopts....
- 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 group including strategy and management of group...
- TPG2022 Chapter X paragraph 10.137A functional analysis shows that M is not subject to credit risk, which remains with the cash pool members, but merely performs a co-ordination function. Furthermore M is not performing the functions or assuming the risks that a bank would. Therefore M would not earn the kind of reward that...
- TPG2022 Chapter X paragraph 10.136As a result of the arrangements in place, M pays less interest to the bank or receives more interest than would have been the case absent the pooling arrangements....
- 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 that M may draw on is guaranteed...
- TPG2022 Chapter X paragraph 10.133X is the parent entity of an MNE group which has subsidiaries H, J, K, and L which participate in a physical cash pooling arrangement with fellow subsidiary M acting as cash pool leader. All participants have the same functional currency and that is the only currency in the pool....
- 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 10.130In 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 level of functionality, the cash pool leader’s...
- TPG2022 Chapter X paragraph 10.129The appropriate reward of the cash pool leader will depend on the facts and circumstances, the functions performed, the assets used and the risks assumed in facilitating a cash pooling arrangement....