The cross-border flow of interest from both internal leveraging and external financing can incur additional levels of taxation called 'withholding tax'. However, the flow of interest need not bear these additional taxes. The flow of interest related to such interest collection and distribution can be efficiently structured through companies located in several different jurisdictions.

Efficient intra-group (i.e., internal leveraging) and external financing can be achieved through the use of an intermediate finance company located in a jurisdiction that provides tax advantages. The finance company is loaned monies from internal and/or external sources for re-lending to lower tiered group companies. The interest paid by the finance company of the first loan is deducted from the interest received from the second loan. The finance company's jurisdiction levies tax on the net interest received. Only a small taxable spread remains in the jurisdiction of the finance company. This structure can effectively reduce cross-border distribution taxation by over 98%.