Operations & compliance
Intercompany agreements
Intercompany agreements are the written contracts that document the terms of transactions between related entities, including pricing mechanics, payment terms, scope of services and termination rights, and they form a core piece of evidence that tax authorities expect to see supporting any intercompany charge or recharge.
Many groups discover during an audit that agreements are missing, outdated, or inconsistent with how the business actually operates, which weakens the credibility of the transfer pricing position even when the underlying pricing itself is defensible on an arm's length basis and well supported by benchmarking data.
Keeping agreements current means updating them whenever the functional profile, pricing method or scope of an intercompany arrangement changes, and cross-checking that invoices, ledger entries and the transfer pricing master file all describe the same transaction in a consistent and mutually reinforcing way. This matters in.
In practice
What matters when applying intercompany agreements
- Cover pricing mechanism explicitly
- Match agreement terms to actual conduct
- Review agreements when the business changes
- Align wording with the master file
- Store agreements centrally and accessibly
Frequently asked
Common questions
Are intercompany agreements legally required?+
Most tax authorities expect written agreements as supporting evidence, and while a missing agreement is rarely fatal on its own, it significantly weakens a group's ability to defend its transfer pricing position under audit.
How often should agreements be reviewed?+
Agreements should be reviewed whenever pricing, scope or functional responsibilities change, and at minimum annually alongside the broader transfer pricing documentation refresh. This matters in practice.
See how the tooling handles this in practice
Our transfer pricing tools calculate intercompany charges, benchmark financing and reconcile the intercompany ledger from your own data. Book a short walkthrough and we will show the workflow on a scenario that matches your group structure, rather than a generic demo dataset.