New Supreme Court Doctrine on Remuneration in Cash Pooling Systems

Judgment STS 3721/2025, July 15, 2025 – Bunge Ibérica S.A. Case

The Spanish Supreme Court has issued a landmark ruling on transfer pricing, with significant implications for multinational groups operating cash pooling systems.

What is the case about?

Bunge Ibérica, S.A. was part of a centralized treasury management system (cash pooling) with its financial headquarters in the Netherlands (Bunge Finance BV).
In its transfer pricing analysis, the company:

Treated debtor positions as loans.
Treated creditor positions as deposits.
Applied different interest rates depending on their nature.

What did the Tax Authorities question?

The most controversial issue was the asymmetry in the treatment of positions:

While debts were compared with market loans, creditor balances were analyzed as mere deposits.

The Tax Authorities argued that:

Both types of transactions should receive the same treatment, since the cash pool leader is not a credit institution, but merely an administrator of the common funds.
It was not acceptable for the leader to capture a significant financial margin when it does not assume risks or contribute significant functions.

Additionally, it was emphasized that:

Financing relied on the group’s credit quality (group credit rating), eliminating the individual risk of subsidiaries.
The taxpayer used long-term financial transactions as comparables, which was questioned because they did not adequately reflect the short-term nature of cash pooling.

What did the Supreme Court decide?

The Supreme Court confirmed the Tax Authorities’ position, ruling that:

It is not consistent with the arm’s length principle for the leader to capture significant financial margins derived from interest rate asymmetry if it does not perform relevant functions or assume significant risks.
The appropriate remuneration of the cash pooling leader must be limited to a fee for low value-adding services, in line with Chapter VII of the OECD Guidelines.
A proper comparability analysis and the selection of suitable comparables are essential to support transfer pricing policies in financial transactions.

Practical implications

The ruling introduces a clear principle:
Symmetry in the remuneration of debtor and creditor positions must prevail when the cash pool leader does not add significant economic value (i.e., it does not act as a financial institution).

Recommendations for multinational groups:

Review the functions and risks of the cash pooling leader.
Avoid relying on the individual credit rating to justify interest differentials when the risk is borne jointly by the cash pooling entities.
Conduct a rigorous comparability analysis, considering maturity, liquidity, and risk.
Consider using methods such as cost plus to remunerate the leader when it performs only low value-adding administrative functions.

Conclusion

Multinational groups should review their cash pooling policies, paying special attention to:

Functional analysis.
Selection of comparables.
Justification of symmetry between debtor and creditor positions.

At ALS Transfer Pricing, we have the experience and technical expertise to help you review and adapt your cash pooling policies, ensuring regulatory compliance and minimizing tax risks.

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