Authors: Veronika Solilová; Danuše Nerudová
Addresses: Faculty of Business and Economics, Mendel University in Brno, Zemedelska 1, 613 00 Brno, Czech Republic ' Faculty of Business and Economics, Mendel University in Brno, Zemedelska 1, 613 00 Brno, Czech Republic
Abstract: Generally, the application of the arm's length principle is a resource-intensive process, because it may impose a heavy administrative burden on taxpayers and tax administrations. With regard to financing activities, intra-group financing has become a very popular tax planning instrument, which has been subjected to scrutiny by both tax authorities and the Base Erosion and Profit Shifting project. Therefore, when assessing the arm's length interest rate for financing arrangements, it is necessary to analyse the various factors and also to comply with thin capitalisation rules if they are implemented. However, a few countries introduced safe harbours that ensure the elimination of other factors of comparability if an interest rate falls within such set range so that the greater simplicity and the reduction of compliance burden will be received. The proposal of safe harbours for intra-group loans in Eurozone was performed based on the experiences in Switzerland, the USA and Australia.
Keywords: transfer pricing; safe harbours; arm's length principle; base erosion and profit shifting project; loans; Euribor; Eurozone; Switzerland; USA; Australia.
International Journal of Monetary Economics and Finance, 2017 Vol.10 No.3/4, pp.341 - 352
Received: 19 Dec 2015
Accepted: 19 Feb 2016
Published online: 10 Oct 2017 *