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PwC Belgium’s Chapter X survey

Report with key conclusions

Assessing the impact of Chapter X of the OECD Guidelines

In February 2020, the OECD released Chapter X of the OECD Guidelines, aiming to bring consistency in the interpretation of the arm’s length principle in relation to financial intra-group transactions, and to help avoid transfer pricing disputes and double taxation. How has this new guidance impacted the transfer pricing policies of multinational companies? 

This is the question that PwC set out to answer in its recent Chapter X Survey conducted at mostly large multinational companies, active in a variety of industries.

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About the survey

During February and March 2021 companies were surveyed on topics such as the perceived importance of intercompany financing and tax controversy, long-term intercompany loans, cash pooling transactions and hedging transactions. In total, 44 individual groups responded, providing a decent sample to draw some key insights and conclusions.  


What did the survey reveal?

Overall, the survey showed the increasing importance of robust legal frameworks, policies and supporting documentation, as a result of the new Chapter X guidance. A sample of some of the findings are as follows.

In relation to the perceived importance of intercompany financing and tax controversy there has been an increased focus on financial transactions during tax audits and it is expected that tax authorities will focus even more on loan and cash pool transactions and especially the economic rationale.

The impact of the guidance on long-term intercompany loans has led to companies creating robust documentation on the underlying business drivers, relevant terms and conditions, as well as the allocation of risks between both contracting parties.

Regarding cash pooling transactions, the study revealed that one year after the release of this guidance, taxpayers are looking into allocation of cash pool synergies, with cash pool leaders often exercising functions beyond the remit of a mere service provider.

"While the new guidance was deemed to create more certainty for taxpayers, 3/4th of the respondents indicated that Chapter X raises more questions than it answers. Besides the traditional technical battlegrounds, various new ones emerged: the vast majority of the participants expect more scrutiny on e.g. the debt quantum and on the business rationale of captives. "

David Ledure

What type of financial intra-group transactions do you have in place?

Participants were asked specific questions on the following types of intra-group financing transactions: 

  • long-term intra-group loans
  • cash pool transactions
  • financial guarantees
  • hedging
  • captives






"The survey reveals that taxpayers expect significantly more scrutiny and controversies around financial transactions. Addressing the sustainability of current and future portfolios is, in my opinion, critical. While documentation is never going to be a priority for taxpayers, setting a new approach to proactively addressing new standards should be on the tax agenda."

Alexis De Méyère
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Contact us

David Ledure

David Ledure

Partner, PwC Belgium

Tel: +32 477 75 24 40

Alexis De Méyère

Alexis De Méyère

Director, PwC Belgium

Tel: +32 497 55 56 55