Intercompany Cost Sharing Agreement Template for England and Wales

An Intercompany Cost Sharing Agreement is a legally binding document under English and Welsh law that establishes the framework for allocating and sharing costs between related entities within a corporate group. It defines the methodology for cost allocation, payment terms, and compliance requirements with transfer pricing regulations. The agreement ensures fair and transparent cost distribution while maintaining compliance with UK tax authorities and corporate governance requirements.

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What is a Intercompany Cost Sharing Agreement?

Intercompany Cost Sharing Agreements are essential tools for multinational and group companies operating under English and Welsh law to formalize their internal cost-sharing arrangements. These agreements are particularly important for tax compliance, especially regarding transfer pricing regulations, and provide a clear framework for allocating shared costs such as IT infrastructure, administrative services, and intellectual property development. The agreement helps demonstrate to tax authorities that intercompany charges are conducted at arm's length and supports the efficient operation of shared service arrangements within corporate groups.

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

1. Parties: Identification of participating group companies and their details

2. Background: Context of the arrangement and group structure

3. Definitions: Key terms used throughout the agreement

4. Cost Allocation Methodology: Detailed explanation of how costs will be shared and calculated

5. Payment Terms: Timing and method of payments between parties

6. Record Keeping: Requirements for maintaining documentation

7. Term and Termination: Duration and termination provisions

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

1. Intellectual Property Rights: Required when shared costs include IP development or when R&D or technology costs are shared

2. Data Protection: Provisions for handling personal data when arrangement involves processing personal data

3. Service Level Requirements: Performance standards for service delivery when arrangement includes service provision

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

1. Cost Allocation Formula: Detailed mathematical formula for cost sharing calculations

2. Participating Group Companies: List of all group entities participating in the arrangement

3. Services/Activities Covered: Detailed list of services or activities subject to cost sharing

4. Transfer Pricing Documentation: Supporting documentation for tax compliance

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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