Applying the Arm's Length Principle to Intra Group Financial Transactions: A Reference Guide

Applying the Arm’s Length Principle to Intra-group Financial Transactions is a unique compendium comprising contributions by more than 50 leading global transfer pricing and international tax experts from law firms, multinational enterprises, academia, and tax administrations. This nonpareil book furnishes unparalleled insights into the application of the Arm’s Length Principle to different types of financial transactions, the application of anti-avoidance rules to various intra-group financial arrangements as well as the business value creation process and the dispute management landscape that underlie intra-group financial transactions.

Delving deep into the legislation and market developments that fuel the diverse range of financing options available to market participants – and replete with pragmatic examples and case studies that cover the legal and economic considerations arising when analysing intra-group finance – the contributors examine the following issues and topics:

• national anti-abuse rules applicable to financial transactions;
• tax treaty issues;
• role of credit ratings and impact of implicit support;
• loans, cash pooling, financial guarantees;
• transfer pricing aspects of performance guarantees;
• ‘mezzanine’ financing;
• considerations for crypto financing;
• impact of crises situations such as COVID-19;
• how treasury operations can be structured in a group and the decision-making process involved;
• how hedges offset or mitigate risks;
• how to apply the arm’s length principle to factoring and captive insurance transactions; comparability analysis for various transactions;
• special considerations for transactions carried out by a permanent establishment;
• EU state aid and its interaction with transfer pricing rules;
• dispute prevention and resolution tools under the OECD, UN, and EU frameworks; and
• developing countries’ perspectives, focusing on Brazil, India, and South Africa.

Bearing in mind the challenges facing taxpayers and tax authorities alike, this book will prove an inestimably valuable reference guide to support tax practitioners, tax administrations, and tax scholars in developing standards and policies in dealing with intra-group financing issues.