On 11 February 2020 the OECD published a long-awaited report containing transfer pricing guidelines for financial transactions.

The report “Transfer Pricing Guidance on Financial Transactions: Inclusive Framework on BEPS: Actions 4, 8-10” also contains a number of practical examples illustrating market price principles for financial transactions.

The report covers the precise identification of financial transactions, in particular with regard to the capital structures of multinational companies.

The report is divided into 5 parts (B- F).

Section B provides guidance on the application of the principles contained in Section D.1 of Chapter I of the OECD Transfer Pricing Guidelines dealing with transfer pricing issues in the context of financial transactions.

Section B.1 indicates how the detailed descriptive analysis under Chapter I applies to the capital structure of a multinational enterprise within a multinational enterprise group

Section B.2 presents the economically significant features that underpin the analysis of the terms and conditions of financial transactions.

Sections C, D and E of the report discuss specific issues related to the valuation of financial transactions (e.g. intragroup loans, cash pooling, collateral, guarantees and insurance).

The comments include both the principles of detailed description of the indicated transactions and the principles of financial transaction valuation.

Section F provides guidance on how to determine the risk-free and risk-adjusted rate of return.

The key sections thus deal with the capital structures of multinational companies and other specific issues relating to the valuation of financial transactions.

It is intended that the entire content of the report will be included in the OECD Transfer Pricing Guidelines – mostly as a new Chapter X.

In addition, it should be noted that the importance of the Report goes well beyond the OECD member countries, as it has been endorsed by 137 members incorporating the OECD BEPS framework (currently there are 36 countries in the OECD structures).

In summary, the objective of developing detailed transactional guidelines is to achieve consistency in the interpretation of the arm’s length principle in the context of such transactions and to effectively avoid disputes between taxpayers and tax administrations and avoid double taxation.

At the same time, it should be emphasized that the OECD Guidelines are not a source of law, but they are a kind of “good practices” which are used by tax authorities not only in Poland but also worldwide when conducting tax audits.


Author: Beata Rawa ? Transfer Pricing Manager