Intercompany agreements can cover different controlled transactions. Below we give a common overview: Transfer pricing documentation is supported by transfer pricing agreements. However, it is not legally binding. Intercompany agreements will help you formalize transfer pricing agreements in a legally binding contract between related companies. There is a quick and easy way to enter into business-to-business agreements without the need for a lawyer or tax specialist. These agreements are designed to be valid in countries around the world. They contain all the key elements of the treaty`s validity. With regard to the content of intercompany agreements, we highlight three fundamental principles: in practice, companies often neglect intercompany contractual obligations. 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: transfer-price-price-compliant with inter-company services agreement. Properly formalize all your business-to-business services.
Corporate transfer pricing agreement. For the provision of low-risk distribution activities. Intragroup sales contract in accordance with transfer prices. For the sale of goods and stocks within the same group. Nevertheless, there are basic requirements to be included in each intercompany contract: this business-to-business sales contract contains the most important clauses, such as a description of the product sold, delivery conditions, guarantees and, of course, the price of arm length. 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.