Finland has interpreted the “new” guidance for Financial Transactions as merely a clarification of prior law.
This interpretation is not novel, and is a position sometimes taken in an audit, rightly or wrongly, for which taxpayers should be aware.
In tax administration statement No. VH/3605/00.01.00/2020, published July 1, Finland’s tax agency explained the relevance of the newly added chapter 10 of the OECD transfer pricing guidelines on financial transactions. With the sole exception of the new guidance on the relevance of a parent company’s credit rating in determining the credit rating of another group member for purposes of pricing intercompany debt, chapter 10 will be applied both prospectively and retrospectively, according to the statement. This includes the guidance on cash pooling, guarantees, captive insurance, and determination of risk-free and risk-adjusted returns.
“The new chapter 10 of the OECD transfer pricing guidelines on transfer pricing for financial transactions does not, in the opinion of the tax administration, contain fundamental new interpretative guidance, except for [determining] the creditworthiness of a separate company. Therefore, the guidelines can otherwise be used as a source of interpretation for tax years ended before the guidelines were published,” the statement says.