What Is A Intercompany Services Agreement

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If you need price-compliant intercompany agreements for your controlled transactions, we have something for you… The tax authorities are not convinced that Pierre Plastic complies with transfer pricing laws. It intends to examine (i) whether the allocation of risks, assets and functions on which transfer pricing agreements were based is consistent with actual agreements and (ii) whether the associated companies have agreed to the transfer pricing agreements. Without intercompany agreements, Pjotr Plastic must now provide further evidence and convince the tax authorities that its transfer pricing position is in fact what it claims – potentially a lengthy and costly discussion. It could have been avoided… In practice, companies often neglect contractual obligations between companies. And even when intercompany agreements are concluded, they are often poorly drafted, obsolete and do not reflect the economic reality of controlled transactions. The lack of intercompany (quality) agreements can be a risk for many reasons. These are the three main ones: Intercompany Agreements (ICAs) describe the legal terminology that provides financial support, products and services within a group.

ICAs can cover a wide range of situations, including back office and head office services, cost and revenue allocation, intellectual property licenses, etc. It has been recognized that intercompany agreements are a fundamental element of the respect of transfer pricing and the use of the management of the OECD (Organisation for Economic Co-operation and Development), beps (Base Erosion and Profit Shifting) by an increasing number of countries each year. This particular importance is monumental only for financial institutions and multinational companies. 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. Intercompany Service Agreement («Agreement») that came into effect from the date of the [identifying parties] and between them, each of the above companies being a member of a group of general insurers and the Intercompany agreements may cover different controlled transactions. Below, we give a common overview: a third-party agreement is, on the other hand, the result of negotiations on CT by two independent companies that protect their own interests.

Normally, such an agreement is carefully crafted and reviewed before being accepted by both companies. It is unlikely that any of the parties would be able to unilaterally dictate the CT of the agreement. With regard to the content of intercompany agreements, we put forward three key principles: one fine day, the tax authorities knock on the door to learn about transfer pricing agreements 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.

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