Perspectives

Financial Services Transfer Pricing:

Changing landscapes

A collection of articles and insights inspired by a range of relevant topics including OECD BEPS initiatives, Brexit, tax audit trends as well as key market and regulatory developments.

Transfer Pricing video roundtable

Host Stephen Weston – UK Partner, introduces this roundtable series of trends in the financial services sector, covering asset management, banking, and insurance.

He is joined by his fellow colleagues and guests, Priscilla Ratilla - UK Director, Greg Martin, and Sebastian Ma’ilei – UK Partner, and Sam Gordon – Japan Partner, Ralf Heussner – Luxembourg Partner, Bill Yohana – US Managing Director, and Silke Imig – German Director who join by audio to contribute to the topic.

    Deloitte's Financial Services transfer pricing global publication

    This document includes a collection of articles and is inspired by a range of topics including the ongoing implementation of the Organization for Economic Cooperation and Development’s Base Erosion and Profit Shifting (OECD BEPS) initiative, Brexit, tax audit trends as well as key market and regulatory developments.

    With insights from our Financial Services Transfer Pricing teams in the Deloitte global network, highlighting the relevant trends and their impact on transfer pricing for the banking, asset management, and insurance sectors.

    Roundtable video topic summaries:

    Asset Management: A discussion on the role of the ManCo and different transfer pricing models

    In this roundtable, Ralf Heussner – Luxembourg Partner & Greg Martin – UK Partner talk about the key issues happening in the industry with the regulatory changes and modifications to operating models, including MiFID 2, AIFMD, and UK’s exit from the EU.

    The discussion focuses on the impact of research cost, fee and distribution models, the cost of a ban on inducement payments, and the rise of technology.

    Watch the video to view this discussion.

    Banking: Practical and illustrative impact of the AOA on bank branch capital

    In this discussion, Stephen Weston – UK Partner, Sam Gordon – Japan Partner, and Silke Imig – German Director, speak to the distinct challenges in the banking sector.

    Silke discusses three approaches authorized by the OECD and their impact in Germany, resulting in stringent Tier 1 capital requirements along with attribution of profits/capital to Permanent Establishment (PE). Sam speaks to how the BIS ratio/Capital allocation approach and Thin capitalization approach have affected the branch capital allocation in Japan. And they also discuss the UK rules that include a capitalization approach, with Capital Attribution Tax Adjustments, and with separate enterprise principle.

    Watch the video to view this discussion.

    Banking: Trends in funds transfer pricing and practical considerations

    Tune into this riveting conversation where Sam Gordon – Japan Partner, Priscilla Ratilal – UK Director, and Bill Yohana – US Managing Director, speak about the recent trends in funds Transfer Pricing, along with the interaction between tax and regulatory dimensions.

    Both Sam and Priscilla agree that FTP methodologies do vary greatly amongst different banks. They speak to how FTPs in banks is based on base rate or cost rate, and risk components like prepayment issues, regulatory costs associated with liquidity.

    Watch the video to view this discussion.

    Insurance: Analysis of our recent survey on the adoption by tax authorities of the AOA globally and the impact for the Insurance sector

    In this roundtable, Seb Ma’ilei – UK Partner, walks through the trends of AOA in the insurance industry with a focus on the acceptability of authorized OECD approach in the Insurance industry. Seb describes how most countries are willing to accept the adoption AOA by tax authorities and APAs, which is an insight gained by the Deloitte Global survey.

    Priscilla Ratilal – UK Director, throws light on Brexit’s impact on clients’ existing branch profit allocation method and ways a UK insurance company could respond to regulations post-Brexit.

    Watch the video to view this discussion.

    Financial Transactions: Key issues in the OECD discussion draft and their impact on Financial Services

    In this discussion, Stephen Weston – UK Partner, and Priscilla Ratilal – UK Director, speak about the delineation of transactions and various characteristics of loans that are being considered currently.

    Other issues discussed in this roundtable that are a part of the OECD draft include cash box, passive association, implicit support, reputational risk, cash pooling, intra-group hedging, and captive insurance.

    Watch the video to view this discussion.

    Brexit: Potential transfer pricing considerations on exit and future operating models

    In this roundtable, Greg Martin, Stephen Weston – UK Partners, and Priscilla Ratilal – UK Director, discuss how all the impacts of Brexit reorganization will likely lead to the movement of people. They focus on the characteristics that would impact the operating model and TP with respect to Operating Model in the Banking and Insurance sectors.

    In the forum, they highlight the factors of risk considerations for TP models, the critical nature of the transition phase after Brexit and preparedness for VAT in transactions.

    Watch the video to view this discussion.

    Concluding the Financial Services Transfer Pricing Series

    In this last episode of the roundtable, Stephen Weston – UK Partner, thanks to all the speakers who contributed insights into the forum.

    Click on the recommended pages below for further reading and in-depth insights on the topics discussed.

    Watch the video to view this discussion.

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