BackThe National High Court, in its ruling of March 23, 2023, examines the valuation of the cash pooling contract or centralization of cash management in a group of companies to which the appellant entity belongs.
The court notes that the appellant differentiates between a loan and a deposit, treating it as a financial entity and applying a higher interest rate to the loan than to the deposit. However, the court considers, in accordance with the ONFI report, that in cash pooling it is logical that the interest rates applied to borrowing entities are generally lower and different from those of independent financial entities in short-term financing contracts.
The returns generated by the entities providing funding in cash pooling should generally be higher than those that would be obtained in the market through a simple deposit with an independent financial institution.
In addition, it is reasonable that “both interest rates (for debit and credit transactions between the participating entities) coincide in the cash pooling agreement, since all the companies that are part of the cash pooling can be contributors or receivers of funds, without knowing in advance the debit or credit position of each one”.
In summary, it is concluded that the leading entity of the cash pooling performs only management and administration functions, allowing the participating entities to withdraw the necessary amounts at any given time, within the limits established in the credit agreements entered into with the leading entity. The role of the lead entity is limited to acting as a clearing mechanism between the contributors of funds and the borrowers, without going beyond a purely administrative or management function.
The Court concludes that the lack of symmetry in a case of cash pooling zero balancing is not reasonable, especially considering the mutual nature of this legal figure. In the case in question, the pooling entity does not provide added value and seeking asymmetry would mean prejudicing the taxable income of the Spanish entity to the benefit of the Dutch-based cash pool management entity, which only performs management functions without assuming risks. In other words, the aim is to benefit the leading entity without demonstrating that it really deserves this benefit.
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