Intercompany Royalty Agreement

-September 23, 2021-

Intercompany Royalty Agreement

Mike Burroughs

It intends to (i) verify whether the allocation of risks, assets and functions on which transfer pricing agreements are based is consistent with the actual agreements and (ii) whether related undertakings have accepted transfer pricing agreements. In the absence of intercompany agreements, Pjotr Plastic now has to provide further evidence and convince the tax authorities that its transfer pricing position is indeed the same as it claims – perhaps a tedious and costly discussion. This could have been avoided. The following example illustrates what can happen without a transfer pricing agreement: the content of intercompany agreements depends largely on the nature of the controlled transaction and the jurisdictions in which the controlled transaction(s) take place. Complex controlled transactions, such as intellectual property licensing, require detailed contracts. . . .

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