Intragroup loans

A Streamlined Approach To Estimate The Arm’s Length Rate Of Intragroup Loans

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A robust and compliant approach to estimate the arm’s length rate of an intragroup financing instrument

TP qube has streamlined the full process to estimate the arm’s length rate of intragroup loans, allowing us to be more accurate and consistent in the estimation of the credit rating of the borrower and subsequently of the interest rate. We strive to provide these analyses faster and cheaper for our clients.

We partnered with a global leading financial information platform to provide fully independent and objective interest rate analyses.

All our analyses are performed by experienced TP staff, ensuring the final quality of the deliverables.

A four-step process

1. Data gathering (incl. phone call and information request)
2. Credit rating estimation
3. Arm’s length range computation
4. Results presentation

Get fast and accurate results, able to convince tax authorities

We follow a straightforward process allowing us and our clients to waste no time.

Our analyses are tailored to the characteristics of the facility and the tested parties (industry, geography, maturity, seniority, creditworthiness, etc.), and respect guidelines and recommendations of international institutions (OECD, UN) as well as local tax authorities.

We guarantee on-time delivery in pre-agreed timeframe.

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Using leading industry benchmark data

  • More than 3 million bond curves updated daily

  • Maturities from 3 months to 30 years

  • 11 industry sectors and over 40 sub-sectors

  • 15 currencies

  • 31 countries

  • Covering all credit ratings (from AAA to CCC-)

  • 3 levels (senior guaranteed, senior non-guaranteed, subordinated)

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Q&A

Which industry and geography do you cover?

We cover all industries and the main geographies. For more details, contact us at [email protected].

Is a credit rating analysis always needed?

Almost always. In some rare situations (such as an important implicit support of the parent), the credit rating of the group can be relied upon to derive the interest rate, and no additional work is needed.

Which parameters are taken into account in order to compute the rate?
Quite a lot! We take into account the characteristics of the intragroup financing instrument such as the industry and geography of the borrower, its creditworthiness, the currency, maturity, seniority of the financing instrument, etc.
Is the approach for cash pooling similar?
  • No! Assessing the arm’s length nature of a cash pool system relies on a different approach.
  • It notably focuses on the functional analysis of the head of the cash pooling. Also, in some cases, parts of the cash pooling may be requalified as long term loans.
What about internal guarantees?
  • Financial guarantees should, in general, also be priced. The approach shares features with the one used to estimate the appropriate interest rates.
Where are the analyses performed? By whom?
All analyses are performed in France by our experienced transfer pricing experts.
Any other question?

Do not hesitate to contact us: [email protected]. It will be our pleasure to help you.

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