The Intercompany Cost Plus Agreement is essential for corporate groups structuring their internal service arrangements under Danish law. It is typically used when one group entity provides services to another and needs to establish a compliant pricing mechanism based on costs plus a markup. The agreement ensures compliance with Danish transfer pricing regulations and OECD guidelines while documenting the arm's length nature of the arrangement. This document is crucial for tax compliance, audit defense, and operational clarity between group entities. It includes comprehensive details about service scope, cost calculations, markup determination, and documentation requirements, making it a fundamental instrument for managing intercompany relationships and demonstrating transfer pricing compliance to tax authorities.
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Key Requirements PROMPT example:
Intercompany Cost Plus Agreement
I need an Intercompany Cost Plus Agreement for IT support services provided by our Danish parent company to subsidiaries across Scandinavia, with a 7% markup and specific service level requirements to be effective from March 1, 2025.
1. Parties: Identification of the service provider and service recipient entities
2. Background: Context of the agreement and relationship between the parties
3. Definitions: Key terms used throughout the agreement including 'Costs', 'Markup', 'Services'
4. Scope of Services: Detailed description of services to be provided
5. Cost Calculation: Definition of cost base and methodology for cost determination
6. Markup: Specified markup percentage and justification for arm's length nature
7. Invoicing and Payment: Terms for invoicing, payment timing, and currency
8. Documentation Requirements: Record-keeping obligations for transfer pricing compliance
9. Term and Termination: Duration of agreement and termination provisions
10. Confidentiality: Protection of confidential information exchanged
11. Governing Law and Jurisdiction: Specification of Danish law and jurisdiction
1. Service Levels: Specific performance metrics and standards, used when service quality measurement is crucial
2. Intellectual Property: IP rights and licenses, needed when services involve IP creation or usage
3. Employee Secondment: Terms for staff assignments between entities, if applicable
4. Force Majeure: Provisions for extraordinary circumstances, if desired
5. Dispute Resolution: Alternative dispute resolution procedures, if preferred over standard court proceedings
6. Tax Gross-Up: Provisions for tax withholding and gross-up, relevant for cross-border services
1. Schedule A - Detailed Service Description: Comprehensive list and description of all services covered
2. Schedule B - Cost Allocation Methodology: Detailed methodology for calculating and allocating costs
3. Schedule C - Markup Calculation: Detailed explanation of markup calculation with benchmarking support
4. Schedule D - Service Levels: Specific performance metrics and measurement methods
5. Schedule E - Key Personnel: List of key personnel involved in service delivery
6. Appendix 1 - Transfer Pricing Documentation: Supporting documentation for arm's length nature of arrangement
7. Appendix 2 - Invoicing Template: Standard format for monthly/quarterly invoicing
Authors
Relevant legal definitions
Clauses
Relevant Industries
Manufacturing
Professional Services
Technology
Financial Services
Pharmaceutical
Consumer Goods
Energy
Telecommunications
Automotive
Industrial Products
Healthcare
Retail
Relevant Teams
Legal
Finance
Tax
Compliance
Treasury
Shared Services
Corporate Development
Operations
Accounting
Internal Audit
Relevant Roles
Chief Financial Officer
Tax Director
Transfer Pricing Manager
Legal Counsel
Finance Manager
Group Controller
Compliance Officer
Head of Shared Services
Financial Controller
Operations Director
Treasury Manager
Tax Counsel
Corporate Lawyer
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