Transfer pricing transactions are now one of the most scrutinized areas for multinational enterprises. With evolving OECD guidance, BEPS initiatives and an increasing focus on economic substance, tax authorities are examining more closely than ever how related-party financing is structured and priced. Beyond simply demonstrating that a loan exists, tax authorities now expect clear and compelling evidence that every transaction is fully supported by a commercial rationale and complies with the arm’s-length principle.

Beyond ‘quote-based’ transfer pricing

For our global energy logistics client, these changes in regulatory developments triggered a need to adapt to the new industry standards and transfer pricing guidelines. For years, the company had relied on bank-provided quotes to set intercompany loan terms, which was market practice in the past, but which required adjustments given the updates and requirements of the OECD guidance.

“In the past, like a lot of other companies, we used to reach out to the market to our banking partners to request quotes for pricing intercompany loans – and these became our benchmarks,” recalls a company treasurer. “It was market practice back then.”

But with tax authorities now probing the rationale behind transfer pricing, it highlighted the need for a  methodology that clearly articulates how and why each loan was priced. This is where Zanders stepped in with the Transfer Pricing Suite – their automated solution for pricing and documenting intercompany financial transactions.

Entity-level loan pricing

The company’s previous process was that indicative quotes from relationship banks were used as basis to price intercompany loans.  The development in OECD guidelines and requirements, combined with the company’s desire to become less dependent on third parties in the pricing of IC-loans, triggered a project to look at alternative solutions in which a balanced assessment based on qualitative- as well as quantitative aspects were taken into account.

Zanders’ Transfer Pricing Suite meets this requirement, by combining market data, credit analytics and standardized methodologies to assess each borrower’s standalone credit quality. The model adjusts for implicit support, sector dynamics and relevant country risk, ensuring loan pricing reflects the borrowing entity’s true risk profile.

However, while the model delivers transparent, defensible calculations, expert judgment still has a role to play – especially when fine-tuning benchmarks to reflect real-world conditions. "When pricing, I will sometimes question whether the benchmark fully reflects reality," a company treasurer explains.

When I reach out to our account manager at Zanders, he immediately helps, building custom benchmarks rather than simply relying on the software output. This personal contact is exactly what’s needed.

Company Treasurer

Audit-ready reporting

In addition to pricing intercompany loans, Zanders’ Transfer Pricing Suite produces comprehensive, audit-ready documentation and reports for the client. Every step of the methodology – from credit scoring and benchmarking to final margin selection – is clearly detailed. This ensures that each financing arrangement is supported by verifiable evidence aligned with OECD guidance and global transfer pricing standards.

“One of the main benefits was the documenting,” a company treasurer explains. “When you run a report, you get a PDF of 20–30 pages, which provides a really good balance between qualitative and quantitative aspects. Before when we asked for quotes from banks, you’d just get a rate based on general calculations on the banking site, but no insight into how the bank considered qualitative factors or implicit credit support. Those are elements that the software explicitly includes, a unique benefit.”

Accuracy, compliance and efficiency

The migration to Zanders’ Transfer Pricing Suite has given the treasury team complete confidence when presenting their intercompany loan arrangements to authorities worldwide, thanks to the following powerful performance advantages:

• Stronger audit defensibility and regulatory compliance

During audits, the treasury team can now present documentation that aligns directly with OECD guidance and financial transaction standards. Each loan is supported by a transparent chain of evidence, removing ambiguity and eliminating reliance on subjective judgement.

• More accurate, performance-based pricing

By shifting away from bank quotes and geography-driven assumptions, loan margins now reflect the true financial reality of each subsidiary. Strong-performing entities benefit from appropriately lower spreads, while higher-risk borrowers receive pricing that aligns with their credit profile. This approach brings a level of fairness and internal consistency that was impossible under the previous, quote-based model.

• Streamlined operations and reduced manual effort

Loan pricing processes that previously required numerous emails, spreadsheets and time-consuming coordination across time zones, can now be run effortlessly through their Zanders-powered platform. With automated documentation generated at the same time. This frees the company’s treasury team to focus on higher-value strategic initiatives.

• Impact across intra-group financing

Beyond transfer pricing, the company now uses the tool for cash pooling and intercompany guarantees – areas not included in the original project. This provides clarity, confidence, and control across all aspects of intercompany financing.

Transforming your transfer pricing?

Whether your organization is facing heightened regulatory scrutiny, managing complex intercompany financing or seeking to replace legacy processes with a modern, data-driven framework – Zanders provides solutions delivered with expertise and pragmatism.

Get in touch to discover how Zanders can transform your intercompany financing strategy and ensure defensible, transparent, and performance-aligned pricing across your global operations with the Transfer Pricing Suite.

The interest in AI has been increasing at record pace, with new technology releases every month and an impressive number of new use cases for chatbots or agents. However, many treasurers still struggle to translate this hype into value-added implementations for their business. These upcoming blog series explore practical use cases for AI that delivers concrete value to treasurers. This article specifically shares an implementation of AI agents to automate the pricing, review and documentation of intercompany loans.

The challenge

One of the core functions for many treasury departments is the distribution of cash in their group. Intra-group loans are one of the tools used by treasurers to distribute cash, but their use comes with challenges. The interest rate on intercompany loans has a significant impact on the tax expense incurred by the subsidiary and taxable income received by the head-office and therefore should be based on an arm's length approach.

Arm’s length pricing of intercompany loans requires a detailed analysis of the credit standing of the borrower, the influence of the group on the borrower’s credit risk, and a review of the debt market to determine a price. Due to the tax implications, this process should be documented in detail including sources and models. Regulations surrounding transfer pricing of financial transactions have been expanding in many countries in the past years, posing greater challenges for treasury teams to perform a complex process with high compliance requirements. As a result, many have resorted to advisors or build complex Excel models to perform the recurring pricing analyses.

The solution

The main challenge when automating the pricing of intercompany loans is the access to data and models. A compliant process relies on the periodic retrieval of benchmark transactions to set an interest rate – for example with bonds, loans, or a Credit Default Swap (CDS). On the other hand, an objective calculation of the credit risk requires a model that is explainable and is filled with company data.

AI Agents are a powerful tool that can be used to automate the retrieval of data and execution of tools in a complex process with changing inputs. In the diagram below, an AI Agent is coupled with a credit rating model, a tool to gather benchmarking data, and a documentation method. In our implementation, we have used the modules in the Zanders Transfer Pricing Solution to provide this functionality to the agent. Next to the tools, it is important to provide the Agent with sufficient context on what role it should play and how it should execute a pricing analysis. The agent should understand the compliance requirements and the tools before it can reliably run the process. For this use case, this is done through context engineering by providing example cases, differences in methods, and checks that the agent should perform.

In the resulting setup, the Agent can automate the full pricing step: identifying entities, calculating a credit rating, and running a pricing benchmark. As a result, the Agent provides a report that is generated according to our template.

With the same tools, we can extend the system even further, by reviewing past calculations versus policies and tax regulations to spot high risk cases or evaluating the credit position of entities to set borrowing limits or update credit ratings. By automating these processes, treasurers can move away from the operational hassle of pricing intercompany loans and instead focus on managing the funding mix of their group. Agents take care of automatic handling of loans and the importing or exporting of data, where treasurers set the objectives of the pricing approach and funding.

AI in Treasury is no longer a futuristic possibility - it's a practical, high-impact technology that Treasury teams can start leveraging today. Do you want to explore intercompany pricing? Let us know in this contact form below.

If you are interested in more use cases, read more here.