The Dutch transfer pricing group has a team that is specialised in the financial services industry as well as intercompany financial transactions.
Our Financial Transaction service offering works with clients to realise value through topics such as cash pools, intercompany loans, factoring, credit guarantees and developing loan pricing policies.
Financial Services introduces hot topics for clients in the banking, insurance, asset management and real estate sectors and provides them with the necessary tools and resources to help identify opportunities.
Given the recent external factors influencing global debt markets (from the financial crisis to changes in the world economic landscape and subsequent responsive regulatory action), in combination with increased sophistication of tax authorities regarding this field, there has never been a more crucial time for companies to ensure the sustainability of their financial transactions transfer pricing position(s).
Many corporations, including those operating outside of the financial services industry, have intercompany financial transactions in place. However, while some corporations have carefully considered the substance and terms of the financial transactions, many may be utilising arbitrary terms. The general standard of documentation produced by taxpayers used to demonstrate the arm’s length nature of intercompany financial transactions may not be sufficient. Tax authorities have the ability to make adjustments and impose penalties if the intercompany financial transaction fails to meet the arm’s length standard, which may lead to double taxation, as well as the cost of time in managing a dispute.
To successfully execute intercompany financial transactions, companies are looking at ways to design supportable policies and build strong communication links between tax, legal, and treasury departments to help bridge the gaps and allow for smooth implementation.
Groups outside the tax department often have low visibility of intercompany financial transactions, which can lead to the common pitfalls of companies engaging in transactions that are not at arm’s length and a lack of sufficient transfer pricing documentation.
PwC can assist clients with navigating the complex area of financial transactions across the entire transfer pricing lifecycle, including planning, audit defence and treasury.
Transfer pricing within the financial services industry raises some of the most complex issues in the transfer pricing arena. The industry covers a wide range of business activities including banking and capital markets, insurance and investment management activities that affect companies across all industries.
In recent years, financial services transfer pricing has received an increasing amount of attention from tax authorities. OECD member countries have issued transfer pricing regulations that are directly applicable to the financial services industry. This increased attention from tax authorities has no doubt increased the pressure on most financial institutions to implement and document transfer pricing policies from a global perspective. Transfer pricing audits of financial services organisations have typically been long, protracted and very time-intensive, sometimes resulting in significant adjustments.
Financial services companies are taking a proactive approach in order to stay ahead of new transfer pricing regulations and policies. They are seeking advice from and working with experienced professionals to better understand and address the following transfer pricing 'hot topics' within their industry:
PwC can help clients by developing, implementing, and documenting cross-border pricing strategies that comply with the requirements of local jurisdictions in which affiliates operate.