Guarantee Analysis

Corporate guarantees and other forms of financial support are among the most commonly used instruments within corporate groups, and at the same time, among the most sensitive from a tax audit perspective. The remuneration for a guarantee must reflect the real economic benefit to the guaranteed entity as well as the level of risk borne by the guarantor.
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Our analysis provides an objective and OECD-compliant assessment confirming that such remuneration is consistent with the arm’s length principle.

As part of the service, we prepare:

1. Nature and justification of the guarantee: identification of the type of guarantee and the guarantor’s scope of liability, analysis of the factual circumstances: purpose of the guarantee, term, amount, risks, and forms of collateral.

‍2. Selection of the appropriate set of comparable data: selection of data sources (internal group data and external market databases),determination of comparability criteria: type of guarantee, tenor, level of collateral, verification of market data availability for similar financial instruments.

‍3. Benchmarking analysis (CUP method): selection of the appropriate external database (e.g., Cbonds, Reuters, RoyaltyRange),initial automated filtering based on the criteria identified earlier (reducing the sample from several hundred thousand to several thousand records),narrowing the results to a set suitable for manual screening — typically around 50 entities, obtaining the final sample (from 5 to 30 results) and determining both the interquartile and full arm’s-length range.

‍4. Documentation and argumentation: preparation of a draft analysis in Word format, including appendices with financial data and calculations, preparation of conclusions for Local File or Master File documentation, exchange of comments and delivery of the final version (approx. 15 pages in Word + Excel and PDF attachments).

‍Client outcomeThe analysis not only confirms compliance with the arm’s length principle but also strengthens the internal framework for financial support within the group, minimises tax risks, and prepares the organisation for potential audits.