Wholesale Banking

Wholesale Banking

Cash pooling

After several years since the implementation of the first Cash Pooling system ING Bank has gained great experiences with the providing of Cash Pooling systems under local conditions and its legal environment. Therefore ING Bank can develop for its Clients tailor-made solutions that fully meet their needs and the requirements. By using cash pooling system clients can benefit from more efficient use of internal resources, saving of interest costs and from convenient and better conditions for proper cash management and treasury operations.

General principles

  • Slovak jurisdiction is missing legislation on Holdings that would define in a clear way the legal rules applicable for parties 
    inside holding structures.
  • Interest (including interest from foreign related party loans) is normally fully tax deductible. „Arm’s length principle“ (market prices principle) has to be applied for each activity between inter-related companies.
  • Interest paid by a Slovak tax resident to a foreign company - tax nonresident of SR is subject to withholding tax - in general 19%, 35% tax rate is applied to customers from non-contracting States. The general rate 19% may be reduced by a doble tax treaty (provided that the tax domicile is provable).
  • With effect from January 1, 2005 the Slovak legislation was partially harmonized with EU-Directive on a common system of taxation applicable to interest and royalty payments made between associated companies of different EU member states. EU Directive on Interests & Royalties is fully implemented in Slovakia as of May 1, 2006.
  • The interests from loans and credits are VAT exempt.
  • The accounting of cash pooling and its results has to be in the compliance with accounting rules.
  • Cash Pooling is not a standard and unified product, but tailor-made solution, which fully meets special requirements of the client.

Cash Pooling - ”Zero Balancing”

  • Zero Balancing (Cash Concentration) is based on the real movements of the funds.
  • All participants have to open an account with ING Bank.
  • A separate account called “Master Account” (MA) is opened for the purpose of cash concentration.
  • An Overdraft Facility is connected to the MA.
  • The account balances of all participants are automatically swept to the MA at the end of each business day i.e.: Consolidated balance on the MA or Zero balance on current accounts of the participants.
  • Interest is calculated on the MA balances on a daily basis and is paid or charged on a monthly basis.
  • Information on the intra-day transactions are available during the day through Internet banking InsideBusiness Payments Slovakia; account statements are available on a the next business day in electronic and paper form.
  • The balance & interest calculation - interest statements overview is provided on a monthly basis.

Notional (Fictive) Cash Pooling

  • Notional Cash Pooling is based on the fictive consolidation of account balances, i.e. there are no real movements of funds between the accounts.
  • All participants have to open an account with ING Bank.
  • The balances remain on the accounts of the participants, the aggregate overdraft facility or separate facilities are connected 
    to all accounts.
  • The daily balances are recorded and the calculation of interest is made on a fictive consolidated amount.
  • There are several ways how to calculate the interest results of  the notional Cash pooling.
  • The calculation sheet comprising all details about the calculation of interest results is available on a monthly basis.

Benefits for Client

  • More efficient using of internal resources.
  • Saving of interest costs.
  • Convenient and better conditions for a proper cash management and treasury operations.

 

Download information about Cash Pooling