For large groups of companies, the management of group finances represents a vitally important and potentially complex activity. Although banks and other third party providers of finance will usually be involved, it is common for groups to have very high volumes of intra- group international financial transactions as well. Treasury management includes
The treasury function is invariably carried out on a
transnational, European or global basis and groups have a choice as
to where they locate the function itself. Treasury activities are,
by their very nature, mobile and can be carried out quite
separately from the rest of the group’s business.
CT & VAT, International CT does not necessarily accept
that treasury companies provide 'services' to affiliates, i.e. the
type of activities which would be appropriately rewarded by
reference to a mark up on costs (the OECD 'cost plus basis'). The
terms “treasury company” and “group finance
company” can cover a wide range of activities, from a simple
conduit for funds to a company with a complex range of activities.
Each set of facts has to be analysed and the pricing of intragroup
loans considered critically.
Inspectors are likely to see some UK multinationals locating
their treasury function outside the UK. And, by the same token, it
is quite possible for foreign multinationals to carry out their
European or global treasury management from the UK. The choice of
location will be influenced by a variety of different factors (see
INTM507030).
