The models are intended to complement the work of transfer pricing experts in the development of appropriate transfer pricing policies for business groups – not to replace them – as well as functional analysis of relevant activities and similar research. LCN Legal does not offer tax or comparable advice. 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. Here are the three most important: signed copies of all contracts are stored in a central and iffyable repository, making it easier to establish agreements for documentation purposes. We have established transfer pricing contract models for the most common controlled transactions. You can buy them separately or in a package with an abrupt discount. We have these models: it is important to ensure that intercompany agreements are in line with reality, comply with transfer pricing documentation and meet market standards. Import existing intercompany agreements and build standard templates that can be customized for each global transaction in any jurisdiction. Avoid repeated data entry and use built-in logic to speed up the design process. There is no need to restart contracts from scratch, and the reference rules will help you correct errors.
The following example shows what can happen without transfer pricing agreements: 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… 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. According to the OECD GUIDELINEs on BEPS, multinational companies must establish a list of key intercompany agreements (ICAs) to support documentation and tax positions in global tax administrations regarding transfer pricing. This model is part of the LCN Legal “Toolkits” of practical resources and intercompany agreements to facilitate the conclusion of intercompany agreements to support their transfer pricing compliance by companies and transfer pricing experts. For more information about the toolkit, click here. Keep your attention on intercompany transactions in your business that may be subject to an intercompany agreement. You can quickly launch new contracts and prepare them for signature with just a few clicks. Identify warnings when contracts expire to avoid coverage loopholes.
Pre-price agreements are prior agreements between multinationals and the IRS regarding the appropriate method of transfer pricing, which can be used for a certain group of transactions for a given period of time. 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.