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Does frequency of invoicing matter in intercompany transactions?

Intercompany Agreements

23 August 2021

This week we'd like to ask you for your insights.

When we work alongside TP professionals to create intercompany agreements for multinational groups, we typically focus on the four main areas of alignment:

1. Delineating the transaction through the parties’ functions and obligations

2. Allocation of risk

3. Ownership of intangible assets

4. Pricing, including guaranteed or targeted returns, where applicable

We usually regard contractual provisions on frequency of invoicing as being less important.

However, during a recent project, a TP adviser said that tax authorities may challenge an annual payment frequency on the grounds that independent third parties may be unwilling to agree to such terms.

What do you think about this? Have you seen tax authorities challenge intercompany transactions on the basis of frequency of invoicing and payments? Do you have any rules of thumb? If you can spare a moment to share your experience we'd be very grateful. We'll share your insights – anonymised, of course – in a future newsletter.

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Article by
Paul Sutton
LCN Legal Co-Founder

Free Guide: Effective Intercompany Agreements for TP Compliance