Overview of the New Guidance on Financial Transactions from a US, Swiss and OECD Perspective - Tax and Legal blog


On February 11, 2020, the Organisation for Economic Cooperation and Development (“OECD”) issued the final version of the Transfer Pricing Guidance on Financial Transactions (the “FT Guidance”).

Although tax and transfer pricing professionals had started to digest the implications of the Guidance and to implement relevant changes relating to financial arrangements, the momentum was very quickly interrupted by the onset of the COVID-19 virus and the resulting economic impact for many sectors within the global economy.

Currently, both Swiss and US multinational enterprises (“MNEs”) may need to take action to manage their liquidity and mitigate the impact of the current situation. In this context, the treasury activities and financial arrangements covered by the FT Guidance are of the uttermost importance for the effective execution of such mitigation and cash management strategies. However, in the current situation, MNEs should take into account the principles outlined in the latest FT Guidance in order to comply with the latest OECD requirements and thus provide support needed to minimise the costs of future audits.

Key highlights

In this article we highlight some important aspects associated with the new FT Guidance. The article broadly covers the following:

  • Overview on the FT Guidance
  • Accurate Delineation of the Transaction
  • Treasury Functions: Intragroup Loans, Cash Pooling, and Hedging
  • Risk-Free and Risk-Adjusted Rates of Return
  • Practical Implications from US and Swiss Perspectives
  • Thin Capitalisation Rules vs Arm’s Length Determination
  • Safe Haven Interest Rates vs Arm’s Length Determination
  • Covid-19 and the Immediate Impact on Financial Transactions

Key takeaways

The latest FT Guidance represents a useful tool for taxpayers and will allow MNEs to review and improve transfer pricing policies in the context of financial transactions, as well as to upgrade transfer pricing documentation, and reinforce benchmarking analyses – all with the aim of avoiding lengthy transfer pricing audits in the future.

In light of the provisions of the Swiss/US DTA, in cases of disagreement between the US and Swiss tax authorities, the Guidance will be relevant for reaching agreement and avoiding double taxation. Therefore, both Swiss and US multinationals should take into account the latest FT Guidance.

For these purposes, also provided in this article is a checklist of points to consider when entering into intercompany financing arrangements.

Download the article to learn more about the New Guidance on Financial Transactions.


If you would like to discuss more on this topic, please reach out to our key contacts below. 

Key contacts

Salim Damji_blog

Salim Damji - Partner, Transfer Pricing and Value Chain Alignment

Salim Damji joined Deloitte Switzerland as a Transfer Pricing and BMO Partner in our Zurich office from another Big Four firm in Switzerland. Salim has been a Big Four firm’s partner for approximately 14 years. He primarily works with Swiss groups to assist them in developing transfer pricing models which are globally sustainable, Advance Pricing Agreements, Mutual Agreement Processes, and Business Restructuring issues. Salim, who works extensively in the field of Intellectual Property, started his career in the UK, before moving to Switzerland in 2005 and worked in the UK, USA, and Switzerland. He holds degrees from Oxford University and Southampton University. .


Martin Krivinskas110x110_blog

Martin Krivinskas - Transfer Pricing and Value Chain Alignment

Martin is an international tax partner with 20 years experience working on international tax matters. He has worked extensively with global multinationals, with a particular focus on helping international group’s mitigate tax risk and manage their effective tax rates. Martin has significant experience of supporting clients with a wide range of transfer pricing and international tax matters and is part of Deloitte` s Global Value Chain Alignment leadership team. Martin`s clients are predominantly in the life sciences, industrial products and consumer products industries.

Martin is a Chartered Accountant and a member of the Chartered Institute of Taxation


Georgy Galumov_blog

George Galumov - Director, Transfer Pricing and Value Chain Alignment

George has more than 12 years of transfer pricing experience covering tax and transfer pricing aspects of various intra-group transactions, including business model and transaction flow design, M&A activity, as well as more mainstream transfer pricing documentation and planning engagements. George has worked with a number of leading multinational corporations including FTSE 100 companies, leading energy and resources businesses, financial services institutions and private equity owned businesses. George has an MSc in Energy Trade and Finance from Cass Business School and is a holder of the Chartered Financial Analyst (CFA) designation.



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