As announced, the OECD published its long-awaited transfer pricing guidance on financial transactions yesterday. After the discussion draft published in July 2018, the current publication represents a consensus document which will be added as a new chapter to the OECD’s transfer pricing guidelines.
A first glance shows us no big surprises compared to the discussion draft, however increased attention on the analysis of all terms and conditions related to a financial transaction may increase the compliance burden for MNEs. For loans, additional pricing methods in the from of credit default swaps and economic modelling have been added. For cash pools on the other hand, the three approaches to reward the cash pool participants have been left out of the final document.
Zanders Inside will publish a detailed article on the expected implications of the guidance shortly. The full text can be found on the OECD website.