Rate of interest on Intra-Group Loans for Real Estate Assets the final End of Mezzanine Debt?

Rate of interest on Intra-Group Loans for Real Estate Assets the final End of Mezzanine Debt?

Consequently, even though the interest used on the financial institution loan could possibly be comparable, it however requires comparability alterations. As suggested into the OECD Transfer Pricing instructions comparability corrections are needed simply because they “increase the dependability regarding the outcomes.

The changes that want become performed should take into account the known proven fact that:

  • Intra-group debts aren’t senior and so are subordinated into the financial loan;
  • Intra-group debts do not have pledge or guarantees;
  • Intra-group maturity that is debts†much much longer set alongside the bank debt.

A premium or margin is added to the bank loan interest rate to account for the difference in priority, maturity and/or security. Continue reading “Rate of interest on Intra-Group Loans for Real Estate Assets the final End of Mezzanine Debt?”