Law firm LCN Legal has published a suite of template intercompany agreements for transfer pricing. The templates form part of the LCN Legal ‘toolkit’ of practical resources for multinational corporates. For more information about the toolkit, click here.
Most transfer pricing professionals agree that intercompany agreements can play an important role in supporting a multinational group’s transfer pricing policies. Despite this, many groups of companies, even large multinationals, have no intercompany agreements in place. Many who do, have no consistent policies for documenting the legal relationships between group companies. One reason for this may be that intercompany agreements often tend to fall between two stools – tax and transfer pricing professionals are reluctant to get involved in contract law, and non-tax lawyers are reluctant to get involved in tax matters.
Ken Almand, Head of Transfer Pricing at accounting firm RSM, said: “Anything that makes it easier for corporates to achieve a consistent, compliant transfer pricing position should be welcomed. These templates provide a very useful and practical resource.”
Paul Sutton, Partner at LCN Legal, commented: “Transfer pricing continues to be widely featured in the news, with varying degrees of accuracy. While the debate continues around companies like Starbucks, Amazon and Google and what is the “right amount of tax” for them to pay, company directors and their tax teams have a job to do – namely to comply with the law. By making this suite of template intercompany agreements available, we want to help make it faster and easier for corporates to comply with their duties. This will help them in any discussions with tax authorities, so they can get to the point as fast and efficiently as possible.”
The following template agreements are included in the launch:
• Services agreement
• R&D services agreement
• Distribution / sale of goods agreement
• Intellectual property licence
• Term loan agreement
LCN Legal says that additional templates will be added in response to demand.
Of course, the templates are designed to complement – and not replace – the work of transfer pricing professionals in creating appropriate transfer pricing policies for corporate groups, including the functional analysis of the relevant activities and comparables research. LCN Legal does not provide tax or comparables advice.
The templates are not a one-size-fits-all approach. They will need to be adapted and tailored for each particular situation.
Paul Sutton continued: “Lawyers are not always known for being user-friendly, and legal documents can often be overly complicated and difficult to read. That’s why we’ve used our experience of helping large corporates on intercompany agreements over a number of years to make the templates short and easy to read, with the key information up-front rather than buried in schedules at the back.”
The Global Head of Transfer Pricing of a Fortune 500 Company commented: “I really like the format!
It is very clear and easy to follow. Can you teach our lawyers to write so clearly? I wonder sometimes if they are being paid by the word.”