Norwegian authorities win interest level in cash pooling system case
July 12, 2010
Helga Marie Andresen and Merethe Bryn of Deloitte in Norway discuss the court’s ruling in the landmark case of ConocoPhillips, which shifted the tax authority’s approach to evaluating whether Norwegian companies receive their part of the profit compared to the group as a whole.
The Norwegian Supreme Court has declined to hear a case the revenue authorities won before the Court of Appeal in January 2010. The case concerns the arm’s-length nature of interest calculations in a cash pooling system in the ConocoPhillips Group. The revenue authorities increased the financial income of two Norwegian companies, ConocoPhillips Scandinavia AS (COPSAS) and Norske ConocoPhillips AS (NCOPAS), on the basis that the interest they received on deposits in the cash pool was not arm’s length.
COPSAS and NCOPAS participated in the ConocoPhillips Group’s cash pooling system in Bank of America (BoA). BoA offered an interest of LIBID – 25 basis points (bp) provided a positive balance and charged an interest of LIBOR + 25 bp in case of a negative balance on the header account. The charge of LIBOR + 25 bp never applied as the header account always kept a positive balance.
Sorry. You must be a subscriber to view this article. Alternatively, why not take a free trial? To subscribe and access this article immediately simply click here or call +44(0)207 779 8380.