This checklist organises evidence for one financing arrangement. The transfer-pricing guide explains the wider controlled-transaction rules and documentation thresholds. Main guide.
Define the transaction actually undertaken
Identify lender, borrower, ownership relationship, amount, currency, drawdown dates, maturity, repayment schedule, security and guarantees. Explain what the borrowing finances and how repayment is expected. Compare the written agreement with the actual bank movements and ledger balances.
A repeatedly extended balance with no realistic repayment plan may require a different analysis from a short-term working-capital facility. Document changes rather than allowing an old contract to describe a transaction that no longer exists in practice.
Support an arm’s-length result
Assess creditworthiness, economic conditions and the relevant financing terms. A bank deposit rate, central-bank rate or another group loan is not automatically a suitable standalone comparable. Explain any benchmark, adjustments and assumptions used.
For example, two €500,000 loans can warrant different analysis when one is secured for six months and the other unsecured for five years to a borrower with weak cash flow. The common principal amount does not establish equal credit risk or equal pricing.
Check annual compliance requirements
Apply the connected-person rules and the documentation thresholds for the actual tax year and transaction category. Assess the Summary Information Table, Local File, minimum documentation and any relevant Master File requirements separately. Do not rely on a threshold copied from a previous year.
If a simplification or safe harbour is proposed, verify that the transaction meets its precise scope and conditions. A safe-harbour label does not replace eligibility evidence or all reporting obligations.
Keep the finance file current
Reconcile principal and interest between both parties, retain balance confirmations and explain exchange differences. Review overdue interest, waivers, impairments and refinancings. Check deductibility and any outbound-payment defensive measures separately from pricing.
An individual director’s debit balance raises additional questions covered in the director-loan guide. For overseas recipients, consult the outbound-payment checklist.