Intercompany agreements are legal agreements between related parties. They define the legal conditions under which services, products and financial support are provided within a group. Intercompany agreements can cover different controlled transactions. Below, we give a common overview: Updating and regularly updating Intercompany agreements can appear to be a complex and costly process. Companies with multiple divisions can benefit from intercompany agreements because they are able to transfer goods and services to a location in the company that will benefit the most, with no negative tax results. In addition, by separating transfers of goods and services resulting from intercompany agreements resulting from other transactions, they are able to help the company and its activities interpret and analyze inventory and sales information more effectively. With regard to the content of the intercompany agreements, we highlight three basic principles: click here to take stock of our current range of services with regard to intercompany agreements for multinationals. Transfer pricing agreements between associated companies must be formalised in intercompany agreements in order to make them legally binding, to comply with transfer pricing legislation and to ensure an appropriate line of defence against the challenges posed by tax authorities. If you don`t, your business is seriously and unnecessarily threatened. Taxpayers should also be particularly aware of whether their intercompany agreements consider how risks are distributed among companies in exceptional circumstances. With regard to internal group procurement, relevant intercompany agreements must, of course, be in line with the group`s transfer pricing policies with respect to the nature, conditions and pricing of the supply. Finally, intercompany agreements must be legally binding, which means that the main provisions of the agreement must have “legal certainty”.
One day, the tax authorities knock on the door to find out about transfer pricing rules and their documentation. Pjotr Plastic informs them that there is documentation on transfer pricing, but there are no intercompany agreements proving that all related companies have approved transfer pricing agreements. U.S. treasury rules define contractual terms that should be taken into account when comparing controlled and uncontrolled intercompany transactions. These conditions are also important to take into account the development (or updating) of an intercompany contract and include the following: Companies often consider that the relationship between companies within a group is probably not under the microscope and therefore cannot invest in clear and legally sound intercompany agreements. The content of intercompany agreements depends largely on the nature of the controlled transaction and the jurisdictions in which the controlled transactions take place. Complex controlled transactions, such as the licensing of intellectual property. B require detailed contracts. Contracts for simple controlled transactions, such as the provision of administrative services, are. B can be maintained easily.
While the tax reasons for properly developed intercompany agreements are sufficiently compelling (in many years, HMRC is networking well over a billion pounds of additional taxes from price transfer applications), there are also non-pilots. This applies primarily to the description of the delivery and the price of the offer, so that these provisions must be objectively established on the basis of the terms of the contract. An intercompany agreement (also known as an “intragroup agreement” or “transfer pricing agreement”) is a (signed) contract between two or more related companies.