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Finance & Treasury Tax Advisory
Assess finance and treasury tax implications and options with confidence
Tax can change the effectiveness and outcomes of actions that treasury teams take. But the rules are complex and evolving globally which can be challenging to comply with. In this increasingly complex and volatile environment, a clear tax strategy for the treasury department is advisable.
Deloitte’s financing and treasury tax advisory professionals work with you to assess, build and operate the tax savvy treasury function your organization needs today, and advising on future enhancements as your business grows.
Deloitte’s financing and treasury tax advisory professionals work with you to assess, build and operate the tax savvy treasury function your organisation needs today and advising on future enhancements as your business grows.
Our work spans across:
Operational advisory – Working with both tax and treasury stakeholders to design and implement sustainable policies that make sense from a tax perspective;
Transactional advisory – Considering the tax consequences of specific transactions, from the basic advancement of funds, to acquisitions, restructurings, or risk mitigation transactions, by assessing tax attributes and reflecting or responding to legislative change; and,
Compliance and tax authority engagement– Assisting clients in analyzing financial transactions and reporting these correctly for tax purposes and facilitating understanding by tax authorities.
Common tax challenges that Deloitte can help treasury functions with include: increasing the visibility of global tax risk exposures; understanding their liquidity position; managing foreign exchange volatility; deploying cash; promoting operational agility; and, embracing technology to enhance effectiveness or efficiency.
Deloitte’s financing and treasury tax advisory teams offers deep experience across the treasury services spectrum and can provide globally consistent advice to help your tax and treasury departments navigate the tax landscape. Deloitte teams routinely collaborate with accounting advisory, treasury technology consulting, financial advisory and legal advisors, and other disciplines to help deliver methods, tools and advice that are both practical and implementable in the context of treasury functions and financial transactions.
Thought leadership and publications
IBOR (Tax Journal UK Article): Are you ready?
Key contacts:Ben Moseley, Mo Malhotra, Gemma Marshall
Interbank offered rates (IBORs) are interest rate benchmarks that underpin a huge number of loans and derivatives. The majority of London interbank offered rates (LIBORs) will be discontinued at the end of 2021. In assessing the overall risk and cost associated with transition away from IBORs, businesses should determine the potential tax implications, which could include taxable amounts arising from accounts carrying value changes or ‘disposal’ events caused by transition, ineffectiveness of hedging relationships for tax purposes, and transfer pricing considerations. Businesses should consider now any actions that could reduce the risk of adverse tax outcomes.
IBOR transition: Overview of potential commercial, tax, legal, and accounting implications (2020).
Key contacts:Mo Malhotra, Ben Moseley
IBORs, including the London Interbank Offered Rate (“LIBOR”), have a key role in financial markets and underpin trillions of dollars in notional value of financial products. However, work is underway in multiple jurisdictions to transition to alternative nearly risk-free rates (“RFRs”) for the interest rate index used in calculating floating or adjustable rates for loans, bonds, derivatives and other financial contracts.
In the UK, the Financial Conduct Authority’s (“FCA”) intention is that at the end of 2021 it will no longer be necessary to persuade, or compel, banks to submit to LIBOR, and the Sterling Overnight Index Average (“SONIA”) will be applicable to GBP-denominated FCA-regulated instruments. Likewise, other RFRs will apply globally.
As businesses transition from IBOR to RFRs it is important, in assessing the overall risk and cost associated with transition, to determine whether there will be any tax implications, driven by the legal, commercial and accounting impacts.
Captive insurance companies of non-insurance groups (2020).
Authors: Seb Ma’ilei, Matej Cresnik, Jeremy Brown
Captive insurance companies are very much in the spotlight at present. The OECD’s February 2020 “Transfer Pricing Guidance on Financial Transactions” includes a section on captive insurance, and captives have been under particular scrutiny by the IRS, with resulting US case law on these arrangements. Alongside these developments, permanent establishment, residency, Diverted Profits Tax and other areas of tax continue to be of relevance for captives.
Financial transactions – (ITR article) Impact of the OECD FT guidelines on the TP environment (2020)
Authors: Mo Malhotra (Tax), Ariel Krinshpun (US) and Ockie Olivier (Australia)
The authors evaluate how the OECD Transfer Pricing Guidance on Financial Transactions will influence an increasingly convoluted transfer pricing environment.
Overall, the guidance is welcome as it provides a number of helpful clarifications, and in many instances, reaffirms approaches that have historically been adopted in practice. However, the authors highlight a number of areas where differences of opinion or interpretation may arise, which is likely to make the environment more complex and challenging.
Contacts: Mo Malhotra (Tax), Rachel Hossack (Legal)
Deloitte Legal has teamed with BRYTER, a member of the Deloitte Legal Ventures cohort, to develop this tool. This tool is free and provides easy, flexible and speedy access to information for users about cash repatriation from entities within selected jurisdictions. The tool covers a large set of countries and is regularly updated. To help you, the Cash Repatriation Tool prepares a summary in pdf format, which sets out the options that may be available within those jurisdictions for a range of entity types. The summary includes generic information in relation to the steps and formalities involved locally as well as a consideration of the tax position. Please note, that the tool provides a high-level overview to inform discussions based on the answers given and it does not constitute tax or legal advice. It should not be relied upon when making any cash repatriation decisions. The decision whether to repatriate cash, and when and how to effect any repatriation, is a complex decision which will include consideration of several tax and legal factors and this tool only provides information on certain factors.
EMEA DBrief Webcast – Overview of the implementation of the anti-hybrid rules in response to ATAD II
Host: Kate Ramm
Presenters: Aart Nolten, Alexander Linn, Francois Pierson
The EU Anti-Tax Avoidance Directives (ATAD I & II) required Member States to introduce a number of domestic anti-abuse provisions, including anti-hybrid rules broadly in line with the OECD recommendations. Most of the anti-hybrid rules were required to be implemented into domestic law by 1 January 2020. Get an update on the implementation of these measures and what this could mean for transactions and arrangements undertaken by your organisation. We’ll discuss:
The latest on the implementation of these rules in Germany, France and the Netherlands;
Some practical consequences of these rules; and
Practical steps to navigating the challenges of implementing these trends in existing processes and systems.
Find out what these rules mean for you from our Deloitte country specialists.
EMEA DBrief Webcast – BEPS Action 4 / Actions 8-10: New OECD Transfer Pricing Guidance on financial transactions (February 2020)
Host: Alison Lobb
Presenters: Mo Malhotra, Georgy Galumov
On 11 February 2020, the G20/OECD Inclusive Framework released new guidance to be included in the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations on transfer pricing aspects of financial transactions. The release provides for the first time specific guidance to businesses and tax authorities on how to determine whether financial transactions between associated enterprises are consistent with the arm’s length principle. What does the new guidance cover? We discuss:
The delineation of financial transactions;
Treasury functions, intra-group loans, cash pooling and hedging; and
OECD releases new guidance on financial transactions (2020)
On 11 February 2020, as part of the G20/OECD Base Erosion and Profit Shifting (‘BEPS’) project, the Inclusive Framework on BEPS released its report ‘Transfer Pricing Guidance on Financial Transactions’ which includes new guidance on the transfer pricing aspects of financial transactions.
This is the first time that specific guidance on the pricing of intra-group financing transactions has been included, and represents a big step forward in preventing and resolving disputes in this area.