Beps Intercompany Agreements

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. In this article, we would like to specifically address the following question: Should I update my intercompany agreements on the basis of BEPS? With regard to the content of the intercompany agreements, we highlight three key principles: in this six-step process, tax authorities may find that trade and financial relations are broader than the “four corners” of the legal document signed by the parties. However, when a transaction has been formalized by parties bound by written contractual agreements, these agreements are not only the starting point for the definition of the transaction between them, but also, as the parties envisioned, to subdivide the responsibilities, risks and expected outcomes resulting from their interaction at the time of the contract. The OECD`s Base Erosion and Profit Shifting (BEPS) project has created uncertainty about various transfer pricing issues and has made an already complex subject even more complex. Now that the dust has subsided and the implementation of the amended regulation is largely complete, it is worth considering the main systematic changes and thinking about the main practical implications. While other contemporary discussions, namely the taxation of the digital economy and the corresponding proposals of the OECD`s “Pillars 1” and 2, are in the spotlight of the transfer pricing world, it is likely that the review of bread and butter compliance tasks will produce more tangible results in terms of reducing your tax risks. While the future form of the regulatory framework is difficult to predict, you can be sure that tax controllers around the world require them to receive transfer pricing documentation and intercompany agreements. Preparation remains the key.

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.