Intercompany Agreements

Intercompany Agreements in the Examining Process for Transfer Pricing Cases

The image on the left shows an extract from the IRS Internal Revenue Manual, confirming the factors to be considered by the relevant IRS team when reviewing intercompany agreements, as part of the examining process in transfer pricing cases. It reads as follows (my italics): IRS EXAMINING PROCESS FOR TRANSFER PRICING CASES: THE ROLE OF…

Intercompany Agreements

The TPc2B Capstone Double Tax Example: what is missing?

Guest Author

This is a guest post by Harold McClure, a New York City-based independent economist with 26 years of transfer pricing and valuation experience. (One of several that he has written for us.) Here he discusses a hypothetical transfer pricing dispute that was recently posited by the American Bar Association. In May 2022, the Transfer Pricing…

Intercompany Agreements

Coca-Cola: what TP policy would you have recommended?

Paul Sutton

If you follow me on LinkedIn, you’ll know that I like to ask questions, shine a light on issues that people might not have considered, and hear others’ views. It’s LinkedIn’s greatest strength, I think: bringing the tax, transfer pricing and legal community together to share ideas and insights. It’s great that people are so…

Intercompany Agreements

What is a ‘swimming pool’ clause in an intercompany agreement?

Paul Sutton

A ‘swimming pool’ clause may be appropriate in a Transfer Pricing context whenever there is an intercompany supply of services, and the activities carried out by the service provider may benefit more than one entity. A classic example would be central support services such as accounting, HR or IT support, which benefits the service provider…

Intercompany Agreements

Tax Journal Article on Implementing Transactional Profit Split Arrangements

Paul Sutton

Allocation of risk in transactional profit split arrangements: a Catch-22? I thought that you might like to read an article that has just been published in the Tax Journal, co-authored by me and the Frankfurt-based TP economist Philip de Homont. The title is ‘Transfer pricing: a framework for implementing transactional profit split arrangements’. In the…

Intercompany Agreements

Exchange rate volatility: who bears the risk?

Paul O’Regan

Volatility in foreign exchange rates seems to be a current feature of economic life. And it’s surely economically significant for the vast majority of multinational groups. Which raises the question from a TP perspective: which entity or entities in the group are intended to bear this risk? And is that position borne out by the…

Intercompany Agreements

The arm’s length principle: a fiction or merely a different perspective?

Paul Sutton

I suspect that most of us in the transfer pricing and legal community would agree that the arm’s length principle is an imperfect instrument. It requires us to collaborate in a fiction – to pretend that two entities are independent when they are not. And it may not fairly allocate taxing rights in the digital…

Intercompany Agreements

How we healthcheck intercompany agreements for TP compliance

Paul Sutton

When we’re reviewing intercompany agreements, we look at four key areas of alignment with TP policies: the delineation of the transaction, the risk allocation, the treatment of IP and intangibles, and the pricing. We also look at a fifth area, namely general fitness for purposes. This includes obvious things such as whether the parties…

Group Reorganisations

LCN Updates

Intercompany Agreements