Interest Rate Benchmarking
Arm's length interest rate setting for intercompany loans
Pricing intercompany loans requires a defensible, OECD-aligned rate that reflects the borrower's credit profile, the facility's currency and tenor, and prevailing market conditions. Our tool produces audit-ready rates and documentation in days rather than weeks, giving finance and tax teams confidence ahead of filing deadlines.
- OECD-aligned methodology
- Credit rating derived from standalone financials
- Comparable bond and loan data
- Full documentation pack per benchmarking
Methodology
A transparent, four-step benchmarking process
From initial credit analysis through to the final rate range, every step of our four-step methodology is documented, evidenced with comparable market data, and structured to withstand scrutiny from tax authorities, external auditors, and internal stakeholders during transfer pricing reviews, audits, or disputes over pricing.
Credit risk assessment
We evaluate the borrower's standalone credit profile, considering its financial ratios, industry position and repayment capacity, and factor in implicit group support where relevant, to derive a defensible credit rating that underpins the arm's-length interest rate calculation for the intercompany loan facility.
Comparable data selection
We source arm's-length comparables from public bond and loan databases, matching tenor, currency, seniority, and credit rating to the intercompany facility being priced, so the resulting range reflects genuine third-party lending conditions rather than generic market averages, rough estimates, or guesswork.
Rate range & median
The tool produces an interquartile range and a median rate consistent with the OECD Transfer Pricing Guidelines, giving you a defensible band within which to set the intercompany rate, supported by transparent statistical analysis of the underlying comparable third-party debt transactions used in the study.
Adjustments & documentation
We apply relevant adjustments for currency, tenor, covenants and any credit enhancements, then compile a documentation pack covering methodology, comparables and results, ready for audit and tax authority review, and structured to align with local transfer pricing documentation requirements across jurisdictions.
Use cases
Where the tool is used
Pricing new intercompany loans and cash pool leg rates
Refreshing rates on existing intercompany financing at year end
Defending intercompany interest deductions in audit
Supporting APAs, MAPs, and financing rulings
Benchmark your intercompany financing
See how we can produce a defensible arm's-length range for your intercompany loans, cash pool legs, or guarantees, backed by comparable market data, transparent methodology, and a documentation pack designed to withstand scrutiny from tax authorities and external auditors across multiple jurisdictions worldwide.
- OECD-aligned methodology
- Credit-risk based approach
- Comparable bond & loan data
- Full documentation pack
Frequently asked
Interest rate benchmarking FAQ
What is interest rate benchmarking?+
The process of determining an arm's-length interest rate for an intercompany loan, based on the borrower's credit profile, the loan's terms, and comparable third-party debt observed in the market. It is required under OECD guidelines and most local transfer pricing rules and regulations in force worldwide today.
How do you assess credit risk?+
We analyse the borrower's standalone financials, industry and market position, then layer in implicit group support where applicable, to derive a credit rating consistent with established rating-agency methodology, giving a robust foundation for selecting truly comparable third-party debt instruments for the analysis.
Which comparables do you use?+
We use publicly listed bond and loan data, filtered by tenor, currency, seniority, and rating band, to build a defensible arm's-length range, supplemented where useful by loan pricing surveys and bank quote data to corroborate the results across several independent market data sources and reputable providers.
Does the output cover documentation?+
Yes. Every benchmarking exercise comes with a full documentation pack covering methodology, comparables, adjustments and results, ready for tax authorities and auditors, and structured so your finance and tax teams can respond quickly and confidently to queries raised during any audit, review or formal dispute.