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A Summary by Taxand Cyprus
Classifying transactions as loans or equity significantly impacts multinational taxpayers, especially when loans exhibit equity-like features such as indefinite maturity, lack of securitisation, or profit-participating traits. Accurate delineation of financial transactions is crucial to determine their proper classification and mitigate potential tax consequences.
Insights into characterising financial transactions can be found in both the 2022 OECD Transfer Pricing Guidelines and the 2021 UN Transfer Pricing Manual. In the transfer pricing realm, recharacterising financial transactions, like intragroup loans, can yield various outcomes.
Christos Theophilou from our member firm, Taxand Cyprus, analyses the complexities involved in debt-equity classification for intra-group financing and the potential tax consequences for multinational taxpayers.
Read more here.
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