Currency exchange in the capital group

Within groups of affiliated entities, certain areas of activity are carried out centrally, utilizing group resources. This also applies to financial areas, such as foreign exchange transaction processing. Collaboration may occur, where a group entity coordinates the process, concludes a transaction with a financial institution, and then executes a similar transaction under the same terms with a group company.

Such a model may be effective from a business perspective, but it raises a practical question in terms of transfer pricing: when determining the value of a controlled transaction, should the full value of the cash flow be taken into account, or only the remuneration due to the group entity for handling the process (i.e. the functions it performs and the added value generated)?

The Director of the National Tax Information Office addressed this issue in an individual interpretation of April 2, 2026, reference number 0111-KDIB2-1.4010.62.2026.1.AJ.

How did the analyzed model work?

The company planned to utilize the support of a related entity in purchasing and selling currencies. In practice, the company would submit a request for a specific currency, and a group entity would execute the corresponding transaction with the bank.

The related entity was then to reconstruct the transaction with the company on the terms obtained from the bank, specifically the exchange rate, volume, and settlement date. The group entity was not to earn any profit from the currency trading itself or add a margin to the bank’s terms. Its remuneration was to cover only organizational and administrative activities (the actual involvement of the service provider), calculated using the cost plus 5% formula.

What raised doubts?

The doubt concerned how to determine the value of a controlled transaction for documentation purposes.

On the one hand, currency flows may have a high nominal value. On the other hand, the actual performance between related parties consisted of a coordinated process, not the sale of currency with a separate margin.

The company therefore wanted to confirm that for the purposes of the documentation thresholds it should only take into account the remuneration due to the group entity for the service provided, without the value of currency transactions carried out with an unrelated bank.

What did the authority find?

The Director of KIS considered the company’s position to be  correct.

In the authority’s opinion, the key element in the described model was the remuneration due to the related entity for coordinating the purchase and sale of currencies. It is this value that should be taken into account when determining the value of a controlled transaction.

However, the value of currency transactions carried out with the participation of an unrelated bank should not have been added, since the banking conditions were transferred to the company without an additional surcharge.

In practice, this means that the mere fact of a high volume of currency exchanged does not necessarily mean that local transfer pricing documentation is required. What matters is the actual transaction between related entities and what the group entity receives remuneration for.

Importance for capital groups

The interpretation is important for groups that use central financial functions, including treasury solutions, shared service centers, or other models for joint handling of currency settlements.

In such structures, technical cash flows should not always be equated with the value of the controlled transaction. For transfer pricing purposes, the actual role of the related entity is crucial: whether it is the actual party to the transaction or merely organizes and manages the process on behalf of other group companies.

This distinction has a direct impact on documentation obligations and transaction terms.

What does this mean in practice?

The interpretation confirms the favorable approach, according to which the nominal value of financial flows is not always decisive when determining the value of a controlled transaction. If the related party performs solely a coordination function, and the terms obtained from an unrelated party (in this case, a bank) are replicated in the relationship with the related party without any additional charge, the value of the controlled transaction may be the consideration for coordinating the cooperation (in this case, currency exchange).

This does not mean, however, that every intra-group currency settlement model will be assessed equally. A different assessment may be warranted, particularly when a group entity determines the settlement terms, applies its own spread, or assumes currency risk.

In practice, it will be crucial to properly define the actual role of the related entity.