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Table of Contents
Cover
Title
Copyright
Acknowledgements
Table of Contents
Chapter 1: The Treasury Functions
1.1. Introduction
1.2. Role of treasury within MNEs
1.2.1. Typical organization of the corporate treasury function
1.2.2. Key functions and risks
1.2.3. Treasury operating model
1.2.4. Centralized intra-group financing policy
1.3. Relationship between tax department and other departments
1.4. Relevance of tax for treasury activities
1.5. Key transfer pricing considerations
1.6. Typical transfer pricing models for intra-group financing companies
1.7. IP considerations to group financing companies
1.8. Common jurisdictions for group financing companies
1.9. Staying in control of transfer pricing for the treasury operations
1.10. BEPS impact on treasury activities
1.11. Concluding remarks
Chapter 2: Accurate Delineation of Intra-Group Financial Transactions
2.1. Introduction
2.2. Nature of intra-group transactions
2.3. Delineation and (re)characterization
2.3.1. OECD Guidelines: Chapter I
2.3.2. OECD Guidance on Financial Transactions
2.3.3. Case study on potential recharacterization: Cash pool deposit position
2.3.4. Case study on recharacterization: Intercompany loan transaction
2.4. Key aspects to be taken into account by practitioners
Chapter 3: International Guidance, Case Law and Market Developments
3.1. Introduction
3.2. The OECD Guidance and selected international developments
3.2.1. OECD guidance on transfer pricing aspects of intra-group financing
3.2.2. Key takeaways for practitioners from the OECD Guidance on Financial Transactions
3.3. UN Guidance
3.4. Interplay with BEPS action reports
3.5. EU developments
3.5.1. EC's Communication of Business Taxation in the 21st Century
3.5.2. ATAD
3.5.3. DAC6
3.6. Case law.
3.6.1. Landmark cases
3.6.2. Selection of cases
3.7. Changing market circumstances and economic crises
3.7.1. Effects of changing market circumstances and economic crises impacting intra-group financing transactions
3.7.2. The impact of COVID-19
3.7.3. COVID-19: Actions to be taken by MNEs
Chapter 4: Credit Ratings
4.1. Introduction
4.2. Background
4.2.1. Credit rating: the basics
4.2.2. Official credit ratings, credit rating agencies and credit rating scales
4.2.3. Types of ratings
4.3. Group rating versus subsidiaries ratings
4.4. Issuer vs. issue-specific rating
notching down/up principles
4.4.1. Notching adjustments
4.5. Determination of credit ratings
4.5.1. Step 1: Determine the standalone credit rating of the affiliate
4.5.2. Step 2: Determine implicit (parental) support considerations
4.5.3. Step 3: Make adjustments for debt features
4.5.4. Overview of methodologies / tools
4.6. Impact of the COVID-19 pandemic
4.7. Transfer pricing case law on credit ratings
Chapter 5: Common Types of Intra-Group Financing Arrangements
5.1. Setting the scene
5.2. Loans
5.2.1. Introduction
5.2.2. Elements of an arm's length intra-group loan
5.2.3. Building block: Volume
5.2.3.1. Debt service capacity analysis
5.2.3.2. Financial ratios
5.2.3.3. Financial modelling and sensitivity analysis
5.2.3.4. Testing the borrower's financial ratios
5.2.3.5. LTV analysis in real estate
5.2.4. Building blocks: Terms and conditions, and creditworthiness
5.2.4.1. Two-sided approach
5.2.5. Building block: Interest rate
5.2.5.1. Pricing approaches
5.2.5.2. Interest rate analysis
5.2.5.3. Identifying comparable transactions
5.2.6. Interplay with other intra-group transactions and transfer pricing applied
5.2.7. Practical examples.
5.3. Cash pooling, management and optimization
5.3.1. Cash pool structures
5.3.2. Accurate delineation
5.3.3. Cash pool: Transfer pricing analysis
5.3.4. Case study
5.4. Financial and performance guarantees
5.4.1. Setting the scene
5.4.2. Types of guarantees
5.4.3. Guarantees: Transfer pricing analysis
5.4.4. Practical examples
5.5. Fees
5.5.1. Introduction
5.5.2. Facility fees
5.5.3. Commitment fees
5.5.4. Upfront fees
5.6. Captive insurance
5.6.1. Introduction
5.6.1.1. OECD and international developments
5.6.1.2. Captive insurance and reinsurance activities
5.6.2. Accurate delineation of transactions
5.6.3. Step approach for determining arm's length remuneration of intra-group captive insurance transactions
5.6.4. Pricing
5.6.4.1. CUP method
5.6.4.2. Actuarial analysis
5.6.4.3. Combined ratio and return on capital
5.6.4.4. Group synergies and agency sales
5.6.4.5. Numerical example
Chapter 6: How to Take Intra-Group Financing Forward in Your Organization
6.1. Introduction
6.2. Re-thinking intra-group treasury operating model and financing set-up
6.3. Relevant developments
6.3.1. Tax and TP developments
6.3.2. Treasury developments
6.3.3. Market developments
6.3.4. Outlook
6.4. Developing an FTTP roadmap
6.4.1. Identify phase
6.4.2. Diagnose phase
6.4.3. Design phase
6.4.4. Implementation phase
6.4.5. Document phase
6.4.6. Maintain phase
Chapter 7: Australia
7.1. Defining an intra-group financing policy
7.1.1. General considerations
7.1.2. Documentation requirements
7.1.3. Impact of the COVID-19 pandemic
7.2. Treasury function
7.2.1. Intra-group loans
7.2.1.1. Loan or equity
7.2.1.2. Profit participating loans
7.2.1.3. Interaction between thin capitalization and TP legislation.
7.2.2. Arm's length interest rate
7.2.2.1. Interest charged
7.2.2.2. TP methods
7.2.3. Cash pooling
7.2.3.1. Interest
7.2.3.2. Remuneration CPL
7.2.3.3. Allocation of cash pool benefit
7.2.3.4. Documentation
7.2.3.5. Advance pricing agreements (APAs)
7.2.4. Hedging
7.3. Financial and performance guarantees
7.3.1. A parent guaranteeing the debt of a wholly owned group company that is unable, on a stand-alone basis, to borrow the debt funding it needs
7.3.2. A parent or offshore associate provides debt funding to a group company that has the financial strength to be able to borrow the debt funding it needs without support from its parent company
7.3.3. A parent company funding a subsidiary that is unable to borrow the funds it needs on a stand-alone basis
7.3.4. A parent company provides a guarantee to a subsidiary that is able to borrow the funds it needs on a stand-alone basis, to allow the subsidiary to access funding at the lower cost available to the parent
7.3.5. TP methods
7.3.6. Use of range of results
7.3.7. Requirement for outcomes to make commercial sense
7.4. Factoring
7.5. Captive insurance
7.6. Leasing
7.7. Other forms of financing and credit risk arrangements
Chapter 8: Brazil
8.1. Defining an intra-group financing policy
8.1.1. Documentation
8.1.2. Impact COVID-19 pandemic
8.1.3. Best practices
8.2. Treasury function
8.2.1. Intra-group loans
8.2.1.1. Loan or equity
8.2.1.2. Profit participating loans
8.2.1.3. Interaction between thin capitalization and TP legislation
8.2.2. Arm's length interest rate
8.2.2.1. Interest charged
8.2.2.2. TP methods
8.2.3. Cash pooling
8.2.3.1. Interest
8.2.3.2. Remuneration CPL
8.2.3.3. Allocation of cash pool benefit
8.2.3.4. Documentation
8.2.3.5. Advance pricing agreements (APAs).
8.2.4. Hedging
8.3. Financial and performance guarantees
8.3.1. A parent guaranteeing the debt of a wholly owned group company that is unable, on a stand-alone basis, to borrow the debt funding it needs
8.3.2. A parent or offshore associate provides debt funding to a group company that has the financial strength to be able to borrow the debt funding it needs without support from its parent company
8.3.3. A parent company funding a subsidiary that is unable to borrow the funds it needs on a stand-alone basis
8.3.4. A parent company provides a guarantee to a subsidiary that is able to borrow the funds it needs on a stand-alone basis, to allow the subsidiary to access funding at the lower cost available to the parent
8.3.5. TP methods
8.3.6. Use of range of results
8.3.7. Requirement for outcomes to make commercial sense
8.4. Factoring
8.5. Captive insurance
8.6. Leasing
8.7. Other forms of financing and credit risk arrangements
Chapter 9: Canada
9.1. Defining an intra-group financing policy
9.1.1. General transfer pricing framework
9.1.2. Specific considerations for intra-group financing transactions
9.2. Treasury function
9.2.1. Intra-group loans
9.2.1.1. Loan or equity
9.2.1.2. Profit participating loans
9.2.1.3. Interaction between thin capitalization and TP legislation
9.2.2. Arm's length interest rate
9.2.2.1. Interest charged
9.2.2.2. TP methods
9.2.3. Cash pooling
9.2.3.1. Interest
9.2.3.2. Remuneration CPL
9.2.3.3. Allocation of cash pool benefit
9.2.3.4. Documentation
9.2.3.5. Advance pricing agreements (APAs)
9.2.4. Hedging
9.3. Financial and performance guarantees
9.3.1. A parent guaranteeing the debt of a wholly owned group company that is unable, on a stand-alone basis, to borrow the debt funding it needs.
9.3.2. A parent or offshore associate provides debt funding to a group company that has the financial strength to be able to borrow the debt funding it needs without support from its parent company.
Title
Copyright
Acknowledgements
Table of Contents
Chapter 1: The Treasury Functions
1.1. Introduction
1.2. Role of treasury within MNEs
1.2.1. Typical organization of the corporate treasury function
1.2.2. Key functions and risks
1.2.3. Treasury operating model
1.2.4. Centralized intra-group financing policy
1.3. Relationship between tax department and other departments
1.4. Relevance of tax for treasury activities
1.5. Key transfer pricing considerations
1.6. Typical transfer pricing models for intra-group financing companies
1.7. IP considerations to group financing companies
1.8. Common jurisdictions for group financing companies
1.9. Staying in control of transfer pricing for the treasury operations
1.10. BEPS impact on treasury activities
1.11. Concluding remarks
Chapter 2: Accurate Delineation of Intra-Group Financial Transactions
2.1. Introduction
2.2. Nature of intra-group transactions
2.3. Delineation and (re)characterization
2.3.1. OECD Guidelines: Chapter I
2.3.2. OECD Guidance on Financial Transactions
2.3.3. Case study on potential recharacterization: Cash pool deposit position
2.3.4. Case study on recharacterization: Intercompany loan transaction
2.4. Key aspects to be taken into account by practitioners
Chapter 3: International Guidance, Case Law and Market Developments
3.1. Introduction
3.2. The OECD Guidance and selected international developments
3.2.1. OECD guidance on transfer pricing aspects of intra-group financing
3.2.2. Key takeaways for practitioners from the OECD Guidance on Financial Transactions
3.3. UN Guidance
3.4. Interplay with BEPS action reports
3.5. EU developments
3.5.1. EC's Communication of Business Taxation in the 21st Century
3.5.2. ATAD
3.5.3. DAC6
3.6. Case law.
3.6.1. Landmark cases
3.6.2. Selection of cases
3.7. Changing market circumstances and economic crises
3.7.1. Effects of changing market circumstances and economic crises impacting intra-group financing transactions
3.7.2. The impact of COVID-19
3.7.3. COVID-19: Actions to be taken by MNEs
Chapter 4: Credit Ratings
4.1. Introduction
4.2. Background
4.2.1. Credit rating: the basics
4.2.2. Official credit ratings, credit rating agencies and credit rating scales
4.2.3. Types of ratings
4.3. Group rating versus subsidiaries ratings
4.4. Issuer vs. issue-specific rating
notching down/up principles
4.4.1. Notching adjustments
4.5. Determination of credit ratings
4.5.1. Step 1: Determine the standalone credit rating of the affiliate
4.5.2. Step 2: Determine implicit (parental) support considerations
4.5.3. Step 3: Make adjustments for debt features
4.5.4. Overview of methodologies / tools
4.6. Impact of the COVID-19 pandemic
4.7. Transfer pricing case law on credit ratings
Chapter 5: Common Types of Intra-Group Financing Arrangements
5.1. Setting the scene
5.2. Loans
5.2.1. Introduction
5.2.2. Elements of an arm's length intra-group loan
5.2.3. Building block: Volume
5.2.3.1. Debt service capacity analysis
5.2.3.2. Financial ratios
5.2.3.3. Financial modelling and sensitivity analysis
5.2.3.4. Testing the borrower's financial ratios
5.2.3.5. LTV analysis in real estate
5.2.4. Building blocks: Terms and conditions, and creditworthiness
5.2.4.1. Two-sided approach
5.2.5. Building block: Interest rate
5.2.5.1. Pricing approaches
5.2.5.2. Interest rate analysis
5.2.5.3. Identifying comparable transactions
5.2.6. Interplay with other intra-group transactions and transfer pricing applied
5.2.7. Practical examples.
5.3. Cash pooling, management and optimization
5.3.1. Cash pool structures
5.3.2. Accurate delineation
5.3.3. Cash pool: Transfer pricing analysis
5.3.4. Case study
5.4. Financial and performance guarantees
5.4.1. Setting the scene
5.4.2. Types of guarantees
5.4.3. Guarantees: Transfer pricing analysis
5.4.4. Practical examples
5.5. Fees
5.5.1. Introduction
5.5.2. Facility fees
5.5.3. Commitment fees
5.5.4. Upfront fees
5.6. Captive insurance
5.6.1. Introduction
5.6.1.1. OECD and international developments
5.6.1.2. Captive insurance and reinsurance activities
5.6.2. Accurate delineation of transactions
5.6.3. Step approach for determining arm's length remuneration of intra-group captive insurance transactions
5.6.4. Pricing
5.6.4.1. CUP method
5.6.4.2. Actuarial analysis
5.6.4.3. Combined ratio and return on capital
5.6.4.4. Group synergies and agency sales
5.6.4.5. Numerical example
Chapter 6: How to Take Intra-Group Financing Forward in Your Organization
6.1. Introduction
6.2. Re-thinking intra-group treasury operating model and financing set-up
6.3. Relevant developments
6.3.1. Tax and TP developments
6.3.2. Treasury developments
6.3.3. Market developments
6.3.4. Outlook
6.4. Developing an FTTP roadmap
6.4.1. Identify phase
6.4.2. Diagnose phase
6.4.3. Design phase
6.4.4. Implementation phase
6.4.5. Document phase
6.4.6. Maintain phase
Chapter 7: Australia
7.1. Defining an intra-group financing policy
7.1.1. General considerations
7.1.2. Documentation requirements
7.1.3. Impact of the COVID-19 pandemic
7.2. Treasury function
7.2.1. Intra-group loans
7.2.1.1. Loan or equity
7.2.1.2. Profit participating loans
7.2.1.3. Interaction between thin capitalization and TP legislation.
7.2.2. Arm's length interest rate
7.2.2.1. Interest charged
7.2.2.2. TP methods
7.2.3. Cash pooling
7.2.3.1. Interest
7.2.3.2. Remuneration CPL
7.2.3.3. Allocation of cash pool benefit
7.2.3.4. Documentation
7.2.3.5. Advance pricing agreements (APAs)
7.2.4. Hedging
7.3. Financial and performance guarantees
7.3.1. A parent guaranteeing the debt of a wholly owned group company that is unable, on a stand-alone basis, to borrow the debt funding it needs
7.3.2. A parent or offshore associate provides debt funding to a group company that has the financial strength to be able to borrow the debt funding it needs without support from its parent company
7.3.3. A parent company funding a subsidiary that is unable to borrow the funds it needs on a stand-alone basis
7.3.4. A parent company provides a guarantee to a subsidiary that is able to borrow the funds it needs on a stand-alone basis, to allow the subsidiary to access funding at the lower cost available to the parent
7.3.5. TP methods
7.3.6. Use of range of results
7.3.7. Requirement for outcomes to make commercial sense
7.4. Factoring
7.5. Captive insurance
7.6. Leasing
7.7. Other forms of financing and credit risk arrangements
Chapter 8: Brazil
8.1. Defining an intra-group financing policy
8.1.1. Documentation
8.1.2. Impact COVID-19 pandemic
8.1.3. Best practices
8.2. Treasury function
8.2.1. Intra-group loans
8.2.1.1. Loan or equity
8.2.1.2. Profit participating loans
8.2.1.3. Interaction between thin capitalization and TP legislation
8.2.2. Arm's length interest rate
8.2.2.1. Interest charged
8.2.2.2. TP methods
8.2.3. Cash pooling
8.2.3.1. Interest
8.2.3.2. Remuneration CPL
8.2.3.3. Allocation of cash pool benefit
8.2.3.4. Documentation
8.2.3.5. Advance pricing agreements (APAs).
8.2.4. Hedging
8.3. Financial and performance guarantees
8.3.1. A parent guaranteeing the debt of a wholly owned group company that is unable, on a stand-alone basis, to borrow the debt funding it needs
8.3.2. A parent or offshore associate provides debt funding to a group company that has the financial strength to be able to borrow the debt funding it needs without support from its parent company
8.3.3. A parent company funding a subsidiary that is unable to borrow the funds it needs on a stand-alone basis
8.3.4. A parent company provides a guarantee to a subsidiary that is able to borrow the funds it needs on a stand-alone basis, to allow the subsidiary to access funding at the lower cost available to the parent
8.3.5. TP methods
8.3.6. Use of range of results
8.3.7. Requirement for outcomes to make commercial sense
8.4. Factoring
8.5. Captive insurance
8.6. Leasing
8.7. Other forms of financing and credit risk arrangements
Chapter 9: Canada
9.1. Defining an intra-group financing policy
9.1.1. General transfer pricing framework
9.1.2. Specific considerations for intra-group financing transactions
9.2. Treasury function
9.2.1. Intra-group loans
9.2.1.1. Loan or equity
9.2.1.2. Profit participating loans
9.2.1.3. Interaction between thin capitalization and TP legislation
9.2.2. Arm's length interest rate
9.2.2.1. Interest charged
9.2.2.2. TP methods
9.2.3. Cash pooling
9.2.3.1. Interest
9.2.3.2. Remuneration CPL
9.2.3.3. Allocation of cash pool benefit
9.2.3.4. Documentation
9.2.3.5. Advance pricing agreements (APAs)
9.2.4. Hedging
9.3. Financial and performance guarantees
9.3.1. A parent guaranteeing the debt of a wholly owned group company that is unable, on a stand-alone basis, to borrow the debt funding it needs.
9.3.2. A parent or offshore associate provides debt funding to a group company that has the financial strength to be able to borrow the debt funding it needs without support from its parent company.