Spanish Supreme Court Cash Pooling Ruling Raises Stakes for MNEs

The Spanish Supreme Court has issued a landmark judgment (3721/2025) that reshapes the transfer pricing landscape for multinational groups using centralized treasury structures, or cash pools.

In a typical cash pool, participating group companies transfer their surplus cash or borrowing needs into a single account managed by a designated group entity, known as the “leader.”

In this case, the leader acted as the central hub, netting the positions of participants and allocating funds where needed, usually without assuming the risks of a full-fledged financial institution.

The court confirmed that:

• Interest rates must be symmetrical for creditor and debtor positions within a cash pool.
• The leader’s remuneration must reflect its limited functions and risks—typically those of an administrator, not a financial intermediary.
• Creditworthiness should be assessed at the group level, not the level of an individual subsidiary.

By rejecting profit allocation to the leader based on interest spreads, the court underscored that most leaders don’t behave like independent financial institutions. This judgment, which aligns with positions previously upheld by the Central Economic-Administrative Court and the National Court, establishes binding doctrine in Spain.

For multinationals, the message is clear: cash pooling policies must reflect economic reality. With tax authorities around the world scrutinizing financial arrangements more closely, proactive compliance will be the best safeguard against costly disputes.

Practical Implications

While the ruling arose from a specific fact pattern, it carries broad implications for multinational enterprises with treasury centralization structures in Spain and beyond.

Symmetry is key. Tax authorities will scrutinize interest differentials between lending and borrowing positions. Multinationals that remunerate their leaders based on spreads should expect challenges unless they can demonstrate genuine additional functions or risks at the leader level.

Leader remuneration—service provider approach. The court made clear that most pool leaders act as service providers. Remuneration should be limited to an administrative fee consistent with their routine functions. If leaders are rewarded with a banking-style margin, taxpayers should be prepared to substantiate the assumption of real credit, market, or liquidity risks.

Group credit rating as benchmark. Using a subsidiary’s standalone rating to justify interest rates is no longer defensible in Spain. Multinationals must align their documentation with the group’s consolidated creditworthiness, which may significantly affect the comparability analysis.

The decision underscores the importance of robust transfer pricing documentation, including:

• A clear functional and risk analysis of the pool leader.
• Justification for interest rates and terms.
• Evidence supporting the treatment of cash pool flows as loans rather than deposits.

Failure to adequately document these aspects could expose taxpayers to adjustments, double taxation, and penalties.

The Case

The case concerned a Spanish subsidiary of a multinational group that participated in a daily cash sweeping system between 2014 and 2015. Under this arrangement, balances were swept into accounts held by a designated group leader. The leader paid one rate for funds placed in the pool and charged a different rate for borrowings, earning the spread as remuneration.

The Spanish tax authority challenged this structure on several grounds:

• Characterization of the transactions: transfers to the leader were reclassified as short-term intercompany loans, not deposits.
• Symmetry of interest rates: different deposit and borrowing rates were deemed inconsistent with the arm’s-length principle.
• Leader’s role: the authority concluded that the leader did not assume meaningful financial risks, but merely carried out administrative functions.

The Central Economic-Administrative Court supported this reasoning, stressing that allocating profits to the leader “lacked sense” when it could not reject funds, determine which entity borrowed, or influence the allocation of liquidity. The National Court agreed, highlighting the need for symmetry and rejecting the idea that the leader added value beyond coordination.

The Supreme Court confirmed these findings, emphasizing that interest rates should be symmetrical and that credit risk must be assessed at the group level.

OECD Guidance

The Supreme Court’s approach aligns with the Organization for Economic Cooperation and Development Transfer Pricing Guidelines, which emphasize that most cash pool leaders perform coordination roles rather than assuming risks comparable to independent financial institutions.

Similar reasoning is emerging in other jurisdictions. Tax authorities in France, Italy, and Germany have also examined whether leaders truly take on financial risks or whether they are, in substance, service providers. The Spanish ruling therefore reflects a broader global shift toward limiting profit allocation to central treasury entities.

For multinationals, this trend signals the need for consistent policies across jurisdictions. Treasury structures designed with aggressive spreads in one country may increasingly be challenged elsewhere.

Actions for Multinationals

Given this precedent, multinationals should:

• Review cash pooling agreements to ensure terms reflect the actual functions and risks of the leader.
• Reassess remuneration models—where spreads are currently used, consider whether a service fee model is more defensible.
• Revisit benchmarking using group-level credit ratings as the starting point.
• Update documentation to clearly capture the rationale for chosen structures and interest rates.
• Consider dispute prevention mechanisms such as advance pricing agreements, which may provide certainty in this evolving area.

Going forward, the Spanish Supreme Court’s ruling on cash pooling marks a turning point for multinational treasury management. By requiring symmetrical interest rates, limiting leader remuneration, and endorsing group-level credit assessments, the court has narrowed the scope for aggressive profit allocation in centralized treasury structures.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

César Salagaray Scarpa is partner, head of tax, and leads the transfer pricing practice with DLA Piper Madrid.

Carlos Espinosa Martinez is legal director, transfer pricing and valuation with DLA Piper Madrid.

Juan Pablo Osman Moreno is principal/knowledge lead, transfer pricing, based in the DLA Piper London office.

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