Cash pooling ― cross-border considerations

Produced by a Tolley Corporation Tax expert

Corporation Tax

Guidance

This guidance note provides an overview of cross-border issues which can arise when companies use cash pooling. For an overview of cash pooling and the different types of cash pool, see the Cash pooling ― overview guidance note. For a discussion of the potential tax issues, see the Cash pooling ― potential tax issues guidance note.

A cross-border cash pool can be more complicated to arrange than a domestic one, as the potential members tend to have accounts with different local banks that cannot be linked together in a pooling arrangement. It is not uncommon for a completely new set of bank accounts to be opened to facilitate a cross-border pool.

Why do groups use cross-border cash pooling?

With the continued growth in global business, groups face increasing pressure to manage the cash and liquidity requirements of neighbouring subsidiaries on a short-term basis without the formality of repatriating profits and advancing structural loans. Cash pooling is an ideal way of achieving this. The downside is that it requires the regular transfer of funds between accounts

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