From a transfer pricing perspective, the central question arises as to how the benefits of the cash pooling agreement will be distributed among the participating companies in the group. Although the cash pooling agreement is with a third-party bank, responsibility for the use of interest rates at comparable market conditions remains with the multinational. These internal rates will most likely differ from the external bank interest rate. Indeed, the solvency of a debtor (with its own individual credit quality) plays an important role in determining the level of an interest rate used. In the situation of a physical cash pool, the debtor is not the external bank, but in fact the participant in the cash pool with a debt position. Therefore, lending rates and internal credit rates usually differ from the bank`s interest rate and depend on the individual creditworthiness of each participating company. When companies in a group invest in a cash pool, they collect their bank accounts and have them managed through a master account. Liquidity is thus pooled, allowing the companies concerned to make significant use of capital raising and capital investments. Cash pooling is possible both at the national level with subsidiaries within a country and across borders.
The main account is declared when the contract includes a credit limit for the group, that the funds made available by the bank have been used. An instrument is subject to reporting when the observed agent creditor allows the debtor to obtain funds after the conclusion of a legally binding agreement with the debtor. In cases where this is not the case, that is: the bank does not provide funding, but only use a zero balance account, is not obliged to report these accounts to AnaCredit, even if they are served by AnaCredit banks. In order for cash pooling to comply with the law and fair, the following rules must be observed: cash pooling can be used to manage the cash position of the multinational on a consolidated basis and concentrate the company`s cash in one place. A cash pool is usually managed by a group company called Cash Pool Leader. The conclusion of a cash pooling agreement can be threefold: initially, both the administrative courts and the tax authorities have shared the view that cash pooling is neither a loan agreement under the Polish Civil Code nor a contract within the meaning of the Corporate Tax Act. Under that interpretation, taxable persons were not required to prepare transfer pricing tax documents in respect of cash consolidation contracts and were not required to comply with restrictions related to small capitalisation. However, between 2015 and 16, a new practice of the High Administrative Court was constituted.
Under this new approach, cash pooling contracts were finally recognised as credit agreements under the CIT Act and are therefore subject to low capitalisation and, when certain thresholds arrived, there was an obligation to draw up transfer pricing documentation.  Subsequently, cash pooling became less attractive. Despite the fact that there have been several amendments, there is currently no definition of a loan under the CIT Act; the law refers to the concept of “credit (loan)”, and the High Administrative Court maintains its position that pooling treasury contracts generally fall into this category. Below we highlight ten important considerations that will help structure cash pooling agreements, in line with the arm`s length principle.  It would appear that the first reference to a term “cash pooling” in government acts appears in the provision of the Federal Statistical Service of the Land of 24.07.2019 N 421 “On the approval of statistical monitoring forms of the Confederation for the organization of statistical monitoring of prices and federal finances”, in which cash pooling is considered as an intra-group credit agreement between companies. . . .