High inflation and increasing interest rates – What is the impact on intragroup financing?

When we speak about intragroup financing transactions involving a Luxembourg company, there are two angles to it. The first angle, like in every other country, consists of benchmarking the interest rate, and the second angle, that is specific to Luxembourg, consists of determining an arm’s length remuneration for a Luxembourg company performing intragroup financing activities. That remuneration is a margin and is supposed to be the difference between the interest perceived and the interest paid.