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    Developments in intercompany financial transactions

    The transfer pricing aspects of intercompany financial transactions are often considered to be complicated. These difficulties arise due to the characteristics of financial instruments and continuous developments of financial markets.

    In this blog, we will touch upon three relevant developments in the world of intercompany financial transactions.

    1. Recent OECD Guidance on the transfer pricing aspects of financial transactions;
    2. Impact of the coronavirus; and
    3. The IBOR transition
    1. Recent OECD Guidance on the transfer pricing aspects of financial transactions

    In February 2020, the OECD published for the first time final guidance on the transfer pricing aspects of financial transactions such as intercompany loans, cash pools, financial guarantees and captive insurance. This new OECD guidance will affect the transfer pricing legislation in most jurisdictions and is a clear signal to analyse or set up your transfer pricing policy on financial transactions, and to look into adequate documentation and the actual pricing methods used.

    For more information on the new OECD guidance and its key aspects, we refer to our blog.

    1. Impact of the coronavirus

    The coronavirus may have a significant impact on your business and as such on your transfer pricing policies. It is therefore important to review and monitor your transfer pricing policy on potential risks and opportunities. Items to be considered are, amongst others, foreign exchange volatility risks, decreased creditworthiness of borrowing companies and your intercompany agreements.

    In addition, a proper alignment between the tax, legal and treasury function is key as group companies may need additional funding and liquidity. In this respect, it is also important to consider the developments in the financial markets such as the volatility of interest rates.

    1. The IBOR transition

    A number of existing interbank offered rates (IBORs) such as the LIBOR will be phased out by the end of 2021. These IBORs will be replaced by alternative reference rates. This is a complex transformation, which will also have an impact on the pricing of intercompany financial transactions and intercompany agreements. Companies that use these IBORs for the pricing of their intercompany financial transactions should evaluate the impact of the transformation and prepare a clear transition plan. Considering the differences between the IBORs and the alternative reference rates, it seems not appropriate to simply replace the IBOR with the respective alternative reference rate for the pricing of intercompany financial transactions.

    If you would like to know more about the developments in intercompany financial transactions, please feel free to join our free-of-charge webinar on 8 October 2020 or reach out to us directly via

    If you are interested in our webinar, please register by sending an e-mail to

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