Business case
Our client, a real estate investment management firm, previously acquired a portfolio of real estate assets that were partly financed through intercompany loans. The client sought to determine whether the interest rates applied to these loans at inception were still in line with current market conditions.
A transfer pricing analysis was necessary to ensure compliance with tax regulations and the arm’s length principle in line with the OECD Transfer Pricing Guidelines. Companies must periodically analyse whether the agreed interest rate is still in line with the market or whether it should be adjusted. This analysis was particularly relevant in light of the macroeconomic environment at the time, with significant changes in interest rates. By implementing different approaches, we were able to determine an accurate interest rate market range for each intercompany loan and help our clients in their decision-making process.
We calculated the borrowers’ credit rating and determined the interest rate market range for the operations under study using various methodologies, combining both internal and external comparable transactions, as well as real estate economic market studies.