It is obvious that the ideal position is to conclude the corresponding Intercompany agreement in advance, as with any trade agreement. The options available depend on the terms proposed under the agreement and whether the rules can be said to be already in place. Signed copies of all agreements are stored in a central and ardent repository, making it easier to establish agreements for documentation purposes. The basic requirement of intercompany agreements is clearly that they are consistent with the functional analysis of transfer pricing. They should also distinguish the offer from other comparable entities and correspond to the legal ownership of the relevant assets. In addition, they should reflect agreements that the directors of all participating companies can properly approve. Long-term contracts are rarely appropriate. Within a larger group, the most effective approach may be to establish short “contractual plans” signed on a bilateral basis between each supplier and recipient, to present key variables and to refer to “standard terms” common to all such deliveries within the group. To minimize the challenges posed by global tax authorities, ONESOURCE Transfer Pricing Intercompany Agreements helps you effectively centralize and manage intercompany agreements so they can be properly generated, updated and analyzed. Optimize the creation and implementation of transfer pricing agreements with a central repository with contract management and electronic signature functions. The best way to develop an intercompany agreement is to take a multidisciplinary approach. Tax and financial experts develop transfer pricing documentation, but may not have the expertise to establish legal documents. Similarly, lawyers are generally in the dark about transfer pricing rules.
It is therefore important to ensure that the right people and skills are on board. What are the consequences of not having an appropriate ICA? In principle, groups that do not have appropriate and signed ICAs are exposed to the risk of unnecessary adjustments to transfer prices, fines and penalties.