Indirect Cost Agreement Template for Switzerland

An indirect cost agreement is a specialized contract that governs how shared overhead expenses are allocated between business entities. Under Swiss law, these agreements must comply with the Swiss Code of Obligations and provide clear frameworks for distributing costs that cannot be directly attributed to specific activities or departments.

When do you need this document?

You need an indirect cost agreement when your business operates in group structures where multiple entities share common resources. This includes situations where subsidiaries share administrative services, IT infrastructure, or management functions provided by a parent company or shared service center. Joint venture partnerships also require these agreements to establish fair cost allocation for shared facilities, equipment, or personnel. If you're operating regional headquarters that provide services to multiple operating entities, or if your holding company incurs costs that benefit various group companies, this agreement ensures transparent and legally compliant cost distribution.

Key legal considerations

The agreement must clearly define all indirect cost categories and establish objective allocation methodologies that can withstand regulatory scrutiny. You need to specify calculation methods, allocation bases such as revenue ratios or headcount, and documentation requirements for cost tracking. The contract should include provisions for regular cost reviews and adjustments to reflect changing business circumstances. Audit rights are crucial, allowing parties to verify cost calculations and supporting documentation. You must also address VAT implications under the Swiss Federal Act on Value Added Tax, ensuring proper treatment of cross-charges between entities. Dispute resolution mechanisms should be established to handle disagreements over cost allocations or calculation methods.

Legal requirements in Switzerland

Swiss law requires indirect cost agreements to comply with the Swiss Code of Obligations regarding contract formation and performance. Under the Swiss Federal Act on Accounting Standards, cost allocation methods must be consistent with recognized accounting principles and properly documented in financial statements. If your arrangement involves public entities, compliance with the Federal Act on Public Procurement may be necessary. The Swiss Federal Act on Financial Market Infrastructures imposes additional reporting requirements for financial aspects of cost calculations in certain business relationships. You must ensure that cost allocation methods are applied consistently across accounting periods and that any changes are properly justified and documented. The agreement should specify record-keeping requirements, typically requiring retention of supporting documentation for at least ten years in accordance with Swiss commercial law.