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Drawing on combined expertise from NERA's Global Transfer Pricing and Securities and Finance Practices, NERA's economists use advanced analytical techniques to provide robust solutions that help taxpayers in determining arm’s length pricing for financial transactions. Our capabilities in this field uniquely position us to manage transfer pricing risk and deliver value to our clients. NERA’s capabilities span all areas of intercompany finance, including loan and guarantee pricing, structured finance and leasing, and thin capitalization and treasury services.
Pricing of intercompany guarantees is becoming one of the most contentious issues in transfer pricing. NERA's expertise in calculating shadow credit ratings, or confirming actual ratings where they already exist, has been developed through extensive work on assignments involving intercompany loans and guarantees. NERA's capabilities in this area include the use of the following methods:
Structured finance refers to financial arrangements that effectively increase access to liquidity and reduce the cost of capital for a borrower. NERA's relevant expertise in this area includes:
While safe harbors and prescriptive rules of controlled entity capitalization may apply in some tax jurisdictions, many others adhere to the arm's length principle of determining how much related debt controlled companies can be expected to bear, and what levels of interest cover should be maintained.
The "thin capitalization" questions are frequently examined by tax
authorities in the context of requests for advance pricing agreements
(APAs) and tax audits, and the challenges faced by taxpayers are
compounded by the effects of the financial crisis. Indeed, the drying up
of bank lending has prompted tax authorities in some jurisdictions to
demand higher levels of interest cover and lower leverage for companies
belonging to an affiliated group.
NERA's approach in this area
complements basic benchmarking with the use of sophisticated financial
modeling to derive an objective, market-based test of capacity to bear
debt and meet interest expense. This approach provides clients with
economically robust answers and its use has been accepted by tax
authorities.
Recent court cases such as GE Capital Canada v. HMQ in Canada and DSG Retail and others vs. HMRC in the UK have highlighted the relevance of transfer pricing for corporate treasury functions.
It
is important that taxpayers have robust policies and processes in place
to ensure not only that intercompany financial transactions are carried
out at arm’s length, but also that this fact can be convincingly
demonstrated to tax authorities. NERA experts provide treasury support
services in the following areas:
Name | Title | Location | Phone | |
---|---|---|---|---|
Dr. Yves Hervé | Senior Managing Director | Frankfurt | +49 69 710 447 508 | yves.herve@nera.com |
Dr. Harlow Higinbotham | Senior Managing Director | Chicago | +1 312 573 2803 | harlow.higinbotham@nera.com |
Tom Braukmann | Director | Frankfurt | +49 69 710 447 511 | tom.braukmann@nera.com |
William P. Hrycay | Director | New York City | +1 212 345 1518 | william.hrycay@nera.com |
Amanda Pletz | Director |
London
Paris Geneva |
+44 20 7659 8528
+33 1 70 75 01 85 +41 22 819 9494 |
amanda.pletz@nera.com |
Alexis Jin | Consultant | Chicago | +1 312 573 4804 | alexis.jin@nera.com |
Dr. Sharon Brown-Hruska | Affiliated Consultant | Washington, DC | +1 202 466 3510 | sharon.hruska.affiliate@nera.com |
Dr. Alexander Voegele | Affiliated Consultant | Frankfurt | +49 69 710 447 501 | alexander.voegele.affiliate@nera.com |
Title | Date | |||
---|---|---|---|---|
Increasing Transfer Pricing Litigation for Multinationals Operating in Europe | 30 March 2021 | |||
Global Transfer Pricing Forum 2020 | 01 December 2020 | |||
TP Minds International 2020 | 01 September 2020 | |||
Life Sciences Accounting and Reporting Congress | 10 August 2020 | |||
Keeping Your International Tax Structure Healthy During a Pandemic | 29 July 2020 | |||
Advanced Transfer Pricing Course at Leiden University | 23 February 2020 | |||
2020 Global Transfer Pricing Conference: Transfer Pricing Developments Around the Wor... | 19 February 2020 | |||
Lecture on Economic Regulation of Natural Monopolies and Optimal Design of Intellectu... | 04 February 2020 | |||
NERA Sponsors the Ninth Annual IBA Finance and Capital Markets Tax Conference | 20 January 2020 | |||
Third Annual NABE Tech Economics Conference (TEC2019) | 03 November 2019 | |||
Title | Date | Type | ||
---|---|---|---|---|
Horst Frisch Economists Join NERA’s Transfer Pricing Practice | 13 September 2022 | Press Release | ||
NERA Expert Recognized as a Leader in Tax by ITR World Tax | 12 September 2022 | Press Release | ||
Horst Frisch Joins Forces with NERA | 18 July 2022 | Press Release | ||
NERA Experts Promoted to Associate Director, Senior Consultant, and Consultant | 23 March 2022 | Press Release | ||
NERA Corporate Tax Expert Recognized in Who’s Who Legal 2021 | 01 October 2021 | Press Release | ||
NERA Director Philip de Homont Listed in Rising Stars Expert Guide 2020 | 22 February 2021 | Press Release | ||
Steadfast in Uncertain Times: How NERA Is Responding | 16 April 2020 | Press Release | ||
NERA Economic Consulting Opens Office in Milan, Italy | 19 November 2019 | Press Release | ||
Who’s Who Legal Recognizes 28 NERA Experts in 2019 Consulting Directory | 30 July 2019 | Press Release | ||
NERA Economic Consulting Announces Senior-Level Promotions | 19 March 2019 | Press Release | ||