Cash pool arrangements are widely employed by multinational enterprises (MNEs) to optimize liquidity management and minimize financing costs. These arrangements carry significant transfer pricing implications that must align with the arm's length principle. This article outlines key considerations, including relevant legislation, credit ratings, implicit and explicit group guarantees, and benchmarking interest rates. Furthermore, it discusses the different types of cash pool structures, the role of the cash pool leader, potential reclassification risks, practical tips for taxpayers, and strategies for developing effective policies.
