Simple Intercompany Agreement

6. Vertical consistency: if the agreement is part of a chain of supplies of goods, services or licences, it shall be verified whether the draft contract complies with the events in the chain above and below the agreement. This includes, where applicable, the final delivery of goods, services or IP licenses to customers. Since companies do not benefit from internal transactions, it becomes necessary for companies to define and document internal transactions that could take place. The purpose of an intercompensation agreement is to document transactions between departments or subsidiaries of a company so that the parent company or entity can make decisions based on the financial results obtained. It also contributes to compliance with laws and regulations, such as Section 482 of the IRS and OECD-BEPS Tax Code, as well as the allocation of risks and liabilities. * global agreements – in which a single document is concluded between several entities. For example, a parent company (P) may provide similar services at headquarters for a number of subsidiaries (S1, S2, S3, etc.). Agreements may be reflected in a single agreement signed by P, S1, S2 and S3.

This Agreement may define the nature of the services provided, the legal conditions of delivery, the method of determining the fees to be paid to P and the method of allocating the royalties between S1, S2 and S3; The terms of intercompany agreements must be consistent with the legal and economic ownership of all relevant assets. For example, an intra-group agreement in which a company claims to grant an intellectual property license that it does not actually own may cause confusion rather than promote the group`s transfer pricing objectives. For example, a group may move from a merchandise sales model (in which local subsidiaries own or acquire the right to market the products in question and sell them to customers who bear a commercial risk) to an agency model (in which local subsidiaries only act as initiation agents and do not take any credit or other commercial risks when selling the products). The seller/client may agree with the local distributors to process the agreements as they have existed since the end of the previous year….