It is important to ensure that intercompany agreements respect reality, comply with transfer pricing documentation and comply with market standards. The following example shows what can happen without transfer pricing agreements: Intercompany agreements are fundamentally different from third-party contracts (also known as commercial contracts). An intercompany agreement is signed by two companies that are part of the same group. Presumably they have the same objective: to increase the group`s result. They have the freedom to arrange the transaction as they see fit, and it is unlikely that there will be an argument. On the face of it, the Intercompany agreement is a formality. 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. Angela Valente, Diego Conte and Alessandro Foti of De Berti Jacchia, Milano, discuss the Italian rules on the documentation of transfer prices adopted on 23 November, which include low value-added services, new signature requirements and the definition of small and medium-sized enterprises .
. . . With Australia`s new transfer pricing landscape and the beps world, Intercompany loans are considered high risks by tax authorities. We`ve often put together below questions from customers that can help you understand what you need to do to reduce the transfer pricing risks associated with intercompany loans. Transfer pricing economists focus on price issues in OECD guidelines, but many practitioners have expressed concerns about the exact delineation of the transaction. With regard to the content of the intercompany agreements, we highlight three key principles: however, there are basic requirements to be included in each intercompany contract: transfer pricing economists can then focus on the Intercompany contract with regard to the date of the loan, the currency of the unit value and the duration of the loan. The standard model for assessing whether an intercompany interest rate is one arm length can be considered as two components: the intercompany contract and the creditworthiness of the borrower of the near party. Although it has been customary to accept the first three terms of a clearly worded intercompany loan agreement, the two OECD guidelines are recent discussions that make tax authorities believe that they are questioning these conditions.