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By Chiara PALMIERI, EY Luxembourg Senior Manager, Transfer Pricing Nicolas GILLET, EY Luxembourg Partner, Transfer Pricing Leader
Private debt has become a significant alternative financing source, particularly in Europe and Luxembourg. While offering flexibility, these structures introduce complex transfer pricing challenges due to bespoke terms, contingent features, and limited market comparables. This article examines key issues in applying the arm’s length principle in relation to intra-group financing in the context of private debt transactions, outlines practical approaches for compliance, and provides a case study illustrating a typical benchmarking in a Luxembourg fund structure. It also explores emerging trends, regulatory scrutiny, and the role...
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