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We’ve updated our guide to intercompany agreements

Intercompany Agreements

19 November 2023

Updated and expanded: our briefing note on effective intercompany agreements

You may know about our briefing document 'Effective Intercompany Agreements for Transfer Pricing Compliance'. It's a detailed guide that covers the basics of ICAs (what they are and why they're essential), as well as including practical recommendations for how to ensure that transfer pricing policies are implemented legally.

We created the first version of the briefing note in 2017, to help address the lack of practical guidance in this area, and to highlight relevant provisions of the 2017 edition of the OECD’s Transfer Pricing Guidelines regarding the role of legal agreements. Since then, the risks arising from misalignment between legal structures and transfer pricing policies have become even more apparent, as shown in numerous transfer pricing decisions worldwide.

Hindsight is always 20/20. It’s easy to look back at taxpayers’ positions in cases like Coca-Cola, and ask how the taxpayers got themselves into a position where their TP documentation did not reflect the legal substance. It’s much harder to design structures in advance, in a way that makes sense from a holistic perspective, and that also mitigates personal liability risks for directors. Our briefing note is designed to help corporates do just that.

The latest version of the briefing note reflects the 2022 edition of the OECD TP Guidelines, as well as more recent developments such as BlackRock, Aspro, Skechers and the 2023 update to the German Administrative Principles on Transfer Pricing. It also covers specific questions such as:

  • Typical defects in the legal implementation of TP
  • Processes required to maintain effective, audit-ready agreements
  • ‘Backdating’ of agreements
  • Drafting approaches to pricing clauses
  • Impact of contractual terms on VAT/GST analysis
  • Approaches to minimise the burden of updating agreements

You can download the updated briefing note here (no login or registration needed).

Please feel free to share the link with anyone else you think would benefit from it.

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Article by
Paul Sutton
LCN Legal Co-Founder

Free Guide: Effective Intercompany Agreements for TP Compliance