The transfer pricing aspects of financial transactions came under the spotlight in 2020 as the OECD finally published a consensus document after many years of discussions. Some countries have already started to implement such guidance into their domestic legislations. Interestingly, many court cases dealing with these topics came to a conclusion during this year too.
These developments provide an opportunity to benchmark the OECD guidance against real-world everyday life. In particular, as it relates to:
- the assessment of implicit support when evaluating the credit rating of the borrower
- Luxembourg’s transfer pricing regime applicable to financing companies and its compatibility with the new OECD Guidance
- the application to regulated entities in light of the soft safe harbor introduced in the new chapter X
- new plans of the German Ministry of Finance to tighten intra-group financing rules and the practical impact on MNEs
- considerations regarding the cash and liquidity management constraints in the corporate treasury function