Home » Allgemein

Purpose Of Intercompany Agreement

11 April 2021 No Comment

Define the intercompany agreements of models currently used within the group and whether they need to be updated. Consider the intragroup deliveries that would benefit most from the intercompany agreements to support the group`s transfer pricing targets. Choose the appropriate contractual model (for example, global agreement. B, bilateral agreements, hybrid, contractual plan/standard conditions). Discover clear account skills for creating and maintaining appropriate models, arranging signatures and archiving signed intercompany agreements. Caution in „return date“ proposals. Finally, intercompany agreements must be legally binding, which means that the main provisions of the agreement must have „legal certainty“. Other common errors are overly complex agreements without reconciling ownership and operation of intellectual property, not adequately reflecting group structures, failing to guard against inappropriate termination provisions, and neglecting the importance of making arrangements for the distribution of costs among multiple recipients of services. Where different legal entities are under common control, it is not necessary for legal agreements between them to apply the same level as details frequently used for unrelated third parties. The objective should be to document keywords as easily as possible, in order to provide an appropriate registration, both for the management of the company and for tax purposes. As a general rule, it is therefore not useful to use the content of commercially negotiated agreements in an internal group context.

Intercompany agreements are contracts between two or more companies or divisions that are owned by the same parent company. It is a contract for internal transactions of sales or transfers of goods and services between companies. The reason for an intercompany agreement is to address certain factors of the parent company in collaboration with the two divisions of the same company. Intercompany agreements are agreements between two companies owned by the same company. Typically, these are two divisions within the same company. This agreement indicates how intercompany sales or transfers of goods, services or time are handled. With regard to the content of intercompany agreements, we put forward three key principles: although they are easier to implement, global agreements have the disadvantage that it is more difficult to meet the specific requirements of local courts without disclosing the „special regime“ to all relevant tax authorities. Setting up their intercompany agreements and ensuring a lean „proof of the future“ process is not a „Nice to Have“ for a multinational organization.

To minimize the challenges posed by global tax authorities, oneSOURCE Transfer Pricing Intercompany Agreements will help you effectively centralize and manage intercompany agreements so they can be properly generated, updated and analyzed. Click here to learn more. This blog is an excerpt from a comprehensive report by LCN Legal on the importance of intercompany agreements.

Comments are closed.