Track intercompany positions and cash pool settlements

Cash Pool Report

Arm’s length interest rates and transfer
pricing methodology in SynerGen Technologies’s
cash pool arrangement "EuroGroup Pool"

01 January, 2025 – 31 December, 2025

Executive Summary

SynerGen Technologies has entered into a cash pooling agreement with EurofiBank, which follows a physical cash pool structure. The cash pool participants’ EUR bank account balances are periodically transferred to, and centralised in, a single bank account owned by the cash pool leader, Treasuro Ltd., at EurofiBank in Grand Duchy of Luxembourg. The centralised cash pool account has a credit interest rate of 2.50% and a debit interest rate of 3.20% with the bank. Stand-alone interest rates of participants ranged from 2.10% to 2.50% for deposits and from to 3.50% to 3.80% for withdrawals.

After an analysis determining the functions assumed, risks borne, and assets used, a remuneration of 28.75% to 47.50% of the interest spread between credit and debit positions within the cash pool was found to be appropriate for the cash pool leader. The interest spread retained by the cash pool leader during the period of 01 January, 2025 – 31 December, 2025 amounted to EUR 120,326,691.05.

The analysis of the cash pool arrangement included "(i) the nature of the advantage or disadvantage, (ii) the amount of the benefit or detriment provided, and (iii) how that benefit or detriment should be divided among members of the MNE group". In line with the OECD Transfer Pricing Guidelines, the synergy created was thereafter distributed among participants proportional to their individual level of contribution to its creation by adjusting their stand-alone interest rates, which were found to be comparable to options realistically available to the cash pool participants by unrelated parties.

During the period of 01 January, 2025 – 31 December, 2025, participants’ arm’s length interest rates, adjusted for synergy created and allocated, ranged from 2.1036% to 3.5603% for deposits and from to 2.7579% to 3.7999% for withdrawals. The companies participating in the cash pooling arrangement created a total synergy of EUR 251,212,891.95 for SynerGen Technologies’s cash pool "EuroGroup Pool". The total cash pool synergy created during this period amounted to EUR 430,575,277.15.

Over the course of 01 January, 2025 – 31 December, 2025, 4 participants had cash balances, which posed structural risks and whose reclassification to long-term loans should be considered.

Table 1: Stand-alone interest rates by company

The cash pool participants’ stand-alone interest rates are arm’s length interest rates, reflective of a participant’s credit rating and ability to pay back a shortterm overnight loan, before any impact of the synergy created within the cash pool arrangement. Furthermore, SynerGen Technologies has found these standalone interest rates to be comparable to options realistically available to the cash pool participants by unrelated parties.

The stand-alone interest rates, along with the function and risk analysis, build the basis upon which the arm’s length rates within the cash pool arrangement are calculated.

2.2    Cash Pool Leader’s Remuneration

In the following, the function and risks assumed by the cash pool leader are presented and quantified.

Section C.2.2 of Chapter X of the OECD Guidelines explains that economically significant risks associated to the cash pooling arrangement must be established before determining an appropriate remuneration for the cash pool leader. Paragraph 10.125 reveals that such risks might include liquidity and credit risk. Assuming these risks involves the exercise of control functions, which go beyond mere co-ordination or agency functions, as per paragraph 10.126 the OECD Guidelines.

Figure 6: Cash pool net balance, volume, and synergy

A total synergy of EUR 430,575,277.15 was created as a result of the cash pool arrangement during the period of 01 January, 2025 – 31 December, 2025. Of these, EUR 190,135,543.27 in synergy were created as a result of netting participants’ balances and EUR 61,077,348.56 in synergy were created as a result of interest from participants’ balances. The cash pool leader created EUR 179,362,385.25 in synergy, due to the difference between its interest rates with the bank and the stand-alone interest rates of the participants.

This amounts to an average daily total cash pool synergy creation of EUR 1,266,397.87, where the cash pool had an average daily volume of EUR 213,947,090.92 and average daily net balance of EUR 57,852,660.96.

5    Conclusion

5.1    Arm’s Length Interest Rates and Payments

Following the analysis of the risks and functions performed within the cash pool, as well as the cash pool participants’ synergy contributions, the aforementioned methodology proceeds to elicit in the participants’ arm’s length interest rates and payments.

In line with paragraph 10.146 of the OECD Guidelines, "it is expected that all cash pool participants will be better off than in the absence of the cash pool arrangement", for example in the manifestation of "enhanced interest rates applicable to debit and credit position [from which cash pool participants would benefit] within the cash pooling arrangement compared to the rates that they would expect to obtain from borrowing or depositing cash outside of the pool".