Join Zanders in our co-development initiative for transfer pricing
The recent publication of the OECD transfer pricing guidelines creates a major shift in the pricing of intercompany financial transactions such as intercompany loans, financial guarantees, cash pools and in-house bank transactions. Treasury and tax professionals are strongly encouraged to revisit their current pricing methodology to ensure transfer pricing compliance. Therefore, on 2 June 2020, Zanders held a webinar on the impact of these new guidelines.
During the webinar, 70% of the audience indicated that cash pool and in-house bank transactions are the most challenging types of transactions to price. Unfortunately, a one-size fits all methodology for these types of complex transactions does not exist. Hence, many corporates struggle to develop a compliant pricing methodology for cash pools and in-house banks.
82% of the audience also indicated that their cash pool and in-house bank interest rates are not yet compliant with these new transfer pricing guidelines. Additionally, some multinationals do not actively monitor structural balances in a cash pool or in-house bank. Structural balances expose taxpayers as tax authorities might reclassify these positions as intercompany loans with different interest conditions. It can be concluded that the implementation of OECD guidelines to company-specific finance structures is not straightforward. Multinationals with a mature in-house bank structure cannot easily map their intercompany finance processes directly to the guidelines.
In response, Zanders has launched a co-development initiative together with 15+ multinationals and several global banks. During this initial stage, the initiative is focused on gathering best practices in intercompany finance. These insights are mapped against the transfer pricing guidelines in order to create a framework to facilitate end-to-end pricing of cash pool and in-house bank transactions. The portrayed outcome of this initiative is to co-develop a new cloud-based solution that will:
- automate the pooling synergy calculation and allocation towards the participants and cash pool leader resulting in a deposit and overdraft rate per cash pool or in-house bank account;
- assess the functional profile of the cash pool in order to document the pricing analysis;
- identify structural balances and send automatic notifications to the users;
- create a holistic view on the entire treasury organization and intercompany cash position.
This functionality will enable corporates to price in-house bank accounts, based on and in compliance with the OECD guidelines, which are also used for different types of transactions, such as netting, payments-on-behalf, factoring, etc.
Corporates that enrol in this co-development initiative are presented with the outcomes of the data gathering and can identify the necessary pricing processes based on the different client cases. Additionally, these corporates are given the opportunity to give feedback on the proof-of-concept of the new cash pooling solution. This level of co-development allows them to ensure that the final solution will have all desired functionality and suits their company-specific intercompany finance structure. The final solution will be launched later this year as addition to the current transfer pricing solution on Zanders Inside for intercompany loans, financial guarantees and stand-alone facilities.
Interested in more information? Do not get left behind and visit our dedicated Zanders Inside webpage and download our booklet. Would you like to join the co-development initiative or receive updates on our progress? Please reach out to Melanie Beirens and Casimir Leuridan. We also invite you to follow us on LinkedIn, where we will also post frequent updates.
About: Zanders Inside is a cloud-based platform that offers innovative solutions in the areas of treasury, risk and finance. Corporate treasurers are presented with a range of solutions that automate and support their treasury operations. These award-winning solutions are ready-to-use and supported by a dedicated team of treasury experts.