The OECD releases its Transfer Pricing Guidance on Financial Transactions


The OECD has released its long-awaited final report on the transfer pricing aspects of financial transactions.

The report will constitute the 10th chapter of the OECD Transfer Pricing Guidelines (as well as an additional section in Chapter I). It covers a wide range of financial transactions and provides guidance on critical aspects to be considered going forward. The new chapter will be the main framework for setting intercompany pricing and for TP audits on financial transactions in most countries.

In particular, the report addresses the following topics:

  • Accurate delineation of the financial transaction;
  • Treasury functions;
  • Intra-group loans;
  • Cash pooling;
  • Hedging;
  • Financial guarantees;
  • Captive insurance;
  • Risk-free and risk-adjusted rates of return.

Please find a detailed summary of this report and its far-reaching impact on most groups here. We will also be organising a WebEx session on 3 March 2020 to walk you through the main points of the document, as well as other recent publications impacting groups’ treasury setups. More information will come soon.