Intercompany loan

Lending between related companies, including entities in the same group. The arrangement must be assessed as debt on its facts; its interest and tax treatment depend on applicable rules.

Intercompany loan in practice

Hypothetical: a parent finances a subsidiary with a loan. Assess genuine debt status, arm’s-length terms, transfer pricing, interest-deduction limits, withholding and the relevant jurisdictions. Choosing a loan rather than equity does not automatically produce an interest deduction. U.S. IRS guidance illustrates one jurisdiction’s rules, not a worldwide result.

Source: IRS: U.S. business interest deduction limitations · IRS: related-party loan technical issues.

Shareholder loans · Debt push-down · Holding company (holdco) · Recharacterization · Double-dip · All of the glossary