New Supreme Court Doctrine on Cash Pooling Remuneration

The Spanish Supreme Court has issued a landmark ruling (STS 3721/2025, dated July 15, 2025) that redefines the criteria for remuneration in cash pooling systems, with significant implications for multinational groups.

Background: The Bunge Ibérica Case

Bunge Ibérica, S.A. was part of a centralized treasury management system with its financial head entity in the Netherlands (Bunge Finance BV).
In its transfer pricing analysis, the company treated debit positions as loans and credit positions as deposits, applying different interest rates depending on their nature.

Issues Raised by the Tax Authorities

The Spanish Tax Administration challenged the asymmetrical treatment of these positions:

• It argued that financing transactions within a cash pool should receive symmetrical treatment, since the pool leader does not act as a credit institution but merely manages common funds.
• It rejected that the pool leader could capture a significant financial margin without assuming risks or performing relevant functions.

Additionally:

• The financing relied on the group’s consolidated credit rating, eliminating the individual credit risk of the subsidiaries.
• The taxpayer used long-term financial transactions as comparables, which were questioned for not accurately reflecting the short-term nature of cash pooling.

Supreme Court Decision

The Supreme Court upheld the position of the Tax Administration, establishing key jurisprudence in transfer pricing matters:

• It is not consistent with the arm’s length principle for the cash pool leader to earn significant financial margins if it performs no relevant functions or assumes substantial risks.
• The appropriate remuneration should be limited to a low value-adding service fee, in line with Chapter VII of the OECD Transfer Pricing Guidelines.
• A robust comparability analysis is essential, selecting transactions with similar maturity, liquidity, and risk characteristics.

Practical Implications

This ruling introduces a clear standard: symmetry in the remuneration of debit and credit positions must prevail when the cash pool leader does not create additional economic value.

For multinational groups with similar structures, it is recommended to:

• Review the functions and risks assumed by the cash pool leader.
• Avoid relying on individual credit ratings to justify interest differentials when risk is shared among participants.
• Conduct a comprehensive functional and comparability analysis.
• Consider applying the cost plus method to remunerate the leader when it performs only low value-adding administrative functions.

How ALS Transfer Pricing Can Help

At ALS Transfer Pricing, we combine technical expertise and legal-tax insight to help you review and adapt your cash pooling policies in light of the new Supreme Court doctrine.

1. Impact Assessment

We analyze your current cash pool structure and determine how the new jurisprudential criteria affect the leader’s remuneration.

2. Functional and Comparability Review

We review existing documentation to ensure consistency between functions, assets, risks, and financial comparables.

3. Policy Redesign and Supporting Documentation

We develop compliant policies aligned with OECD Guidelines and Spanish tax authority expectations, minimizing adjustment and penalty risks.

4. Ongoing Support

We continuously monitor legal and regulatory developments to keep your transfer pricing policies updated and aligned with international best practices.

At ALS Transfer Pricing, our goal is to help you minimize tax risks, ensure compliance, and optimize your group’s financial efficiency in an ever-evolving regulatory environment.