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A Intercompany Agreement sets out the rules and terms when different parts of the same company group do business with each other. Think of it as an internal contract that governs how affiliated companies share resources, transfer goods, or provide services among themselves.

These agreements help companies comply with tax laws, transfer pricing regulations, and corporate governance requirements in the U.S. They spell out important details like payment terms, pricing methods, and service levels between related entities. Without proper documentation, companies risk IRS scrutiny and potential penalties, especially for cross-border transactions between subsidiaries.

Put Intercompany Agreements in place whenever your business group starts sharing resources or services between affiliated companies. This includes situations like a parent company providing management services to subsidiaries, related companies sharing intellectual property, or different branches handling internal sales and transfers.

These agreements become essential during tax audits, when expanding operations across state lines, or before corporate restructuring. Having clear documentation protects your company from IRS challenges to transfer pricing, helps maintain corporate liability shields, and ensures compliance with state and federal regulations. Many companies create these agreements during their annual planning cycle or when launching new internal business relationships.

• Service Agreements: Cover management fees, IT support, or administrative services between related companies
• License and IP Agreements: Handle intellectual property sharing and usage rights within company groups
• Cost Sharing Agreements: Outline how affiliated entities split research, development, or operational costs
• Sales and Distribution Agreements: Govern internal product sales and transfer pricing between divisions
• Loan and Financing Agreements: Structure internal lending and financial arrangements between group entities

• Corporate Legal Teams: Draft and review agreements to ensure compliance with tax laws and corporate regulations
• Tax Directors: Guide transfer pricing policies and documentation requirements across the company group
• Executive Officers: Sign and authorize agreements as representatives of their respective entities
• Finance Departments: Implement pricing structures and monitor financial transactions between affiliates
• Compliance Officers: Ensure agreements meet regulatory requirements and maintain proper documentation
• External Auditors: Review agreements during annual audits to verify proper intercompany relationships

• Company Details: Gather legal names, registration numbers, and addresses of all affiliated entities involved
• Service Scope: Define exact services, products, or resources being shared between entities
• Pricing Method: Document your transfer pricing methodology and supporting market comparables
• Payment Terms: Outline payment schedules, currencies, and settlement procedures
• Performance Metrics: Specify service levels, quality standards, and delivery timeframes
• Compliance Check: Review IRS requirements and state regulations for intercompany transactions
• Approval Process: Identify authorized signatories and internal approval requirements

• Party Information: Full legal names, addresses, and registration details of all affiliated entities
• Service Description: Detailed scope of services, goods, or resources being exchanged
• Pricing Terms: Transfer pricing methodology, payment schedules, and calculation methods
• Performance Standards: Service levels, quality metrics, and delivery requirements
• Term and Termination: Duration, renewal options, and exit provisions
• Confidentiality: Protection of sensitive business information shared between entities
• Governing Law: Applicable jurisdiction and dispute resolution procedures
• Signature Blocks: Authorized signatories' details and execution requirements

Intercompany Agreements are often confused with Affiliate Agreement, but they serve distinct purposes in business relationships. While both govern relationships between connected entities, their legal framework and application differ significantly.

• Relationship Type: Intercompany Agreements regulate transactions between entities under common ownership or control, while Affiliate Agreements govern relationships between independent businesses partnering for mutual benefit
• Tax Implications: Intercompany Agreements must comply with transfer pricing rules and consolidated tax reporting requirements; Affiliate Agreements focus on commission structures and third-party revenue sharing
• Regulatory Oversight: Intercompany Agreements face stricter IRS scrutiny and corporate governance requirements; Affiliate Agreements primarily address marketing and promotional relationships
• Documentation Requirements: Intercompany Agreements need detailed cost allocation and pricing justification; Affiliate Agreements emphasize performance metrics and commission calculations