Intercompany Cost Plus Agreement Template for England and Wales

A legally binding agreement governed by English and Welsh law that establishes the terms for provision of services or goods between related entities within a corporate group. The agreement defines the cost calculation methodology and applies an agreed mark-up percentage to determine the final transfer price. It ensures compliance with transfer pricing regulations while documenting the commercial basis of intercompany transactions.

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What is a Intercompany Cost Plus Agreement?

The Intercompany Cost Plus Agreement is essential for multinational enterprises operating in England and Wales to document and regulate internal service provisions between group entities. It establishes a clear methodology for calculating costs and determining appropriate mark-ups, ensuring compliance with transfer pricing regulations and tax authorities' requirements. This agreement type is particularly important for demonstrating arm's length pricing in related party transactions and supporting group tax positions.

What sections should be included in a Intercompany Cost Plus Agreement?

1. Parties: Identification of service provider and recipient entities

2. Background: Context of the agreement and relationship between parties

3. Definitions: Key terms used throughout the agreement including cost components, services, and relevant accounting terms

4. Services: Detailed description of services to be provided between the parties

5. Cost Calculation: Methodology for determining base costs and included cost components

6. Mark-up: Agreed percentage and calculation method for the cost-plus arrangement

7. Payment Terms: Billing frequency, payment arrangements, and currency provisions

8. Term and Termination: Duration of agreement and circumstances for termination

What sections are optional to include in a Intercompany Cost Plus Agreement?

1. Service Levels: Performance metrics and standards for service delivery

2. Intellectual Property: IP rights and protections between group companies

3. Data Protection: GDPR and data handling requirements between parties

4. Force Majeure: Provisions for unforeseen circumstances affecting service delivery

What schedules should be included in a Intercompany Cost Plus Agreement?

1. Schedule 1 - Service Description: Detailed breakdown of services and deliverables

2. Schedule 2 - Cost Calculation Methodology: Detailed explanation of cost components and calculations

3. Schedule 3 - Transfer Pricing Documentation: Supporting analysis for chosen mark-up rate

4. Schedule 4 - Service Level Agreement: Detailed performance metrics and measurements

5. Schedule 5 - Governance Framework: Management structure and escalation procedures

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

England and Wales

Publisher

Genie AI

Cost

Free to use

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