Simplified procedures exist, according to which the transactions of financing companies pursuing a purely intermediary activity are deemed to comply with the arm's length principle if the company under review receives a minimum return of 2% after tax on assets.
This aim could be achieved by setting aside domestic rules and using the new Article 7 of the OECD Model Convention as a paradigm to establish an international consensus for the capital structure of both permanent establishments and subsidiaries in line with the arm's length principle.
In a multilateral context the arm's length principle was formulated for the first time in Article 6 of the League of Nations draft Convention on the Allocation of Profits and Property of International Enterprises in 1936.
Under such circumstances the arm's length principle is preferred (Sekulic Grgic, 2005), according to which efforts are being made to determine a price agreed between independent subjects within a same or comparable transaction.
The point of the arm's length principle is to ensure that politicians - most of whom do not have artistic sensibilities - are not allowed a say in which artists should receive public funding, and how much.