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Intercompany Cost Plus Agreement Template for Germany

A comprehensive agreement governed by German law that establishes the terms and conditions for the provision of intercompany services between related entities, specifically utilizing a cost-plus pricing methodology. The document outlines the calculation of service costs, applicable mark-up rates, and documentation requirements in compliance with German transfer pricing regulations. It includes detailed provisions for cost determination, service scope, invoicing procedures, and audit rights, while ensuring adherence to both German tax law and EU transfer pricing guidelines.

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What is a Intercompany Cost Plus Agreement?

The Intercompany Cost Plus Agreement is essential for multinational corporate groups operating in Germany who need to establish compliant and efficient intercompany service arrangements. This document type is particularly relevant when one group entity provides services to another related entity and requires a structured approach to cost allocation and mark-up determination. The agreement ensures compliance with German transfer pricing regulations, tax laws, and documentation requirements while providing a clear framework for calculating service charges. It is commonly used for shared services, management services, technical support, and other intercompany arrangements where services are provided at cost plus an appropriate mark-up. The document includes comprehensive provisions for cost calculation methodologies, service scope definition, documentation requirements, and audit rights, all aligned with German legal requirements and international transfer pricing principles.

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

1. Parties: Identification of the service provider and service recipient entities, including full legal names, registration details, and addresses

2. Background: Context of the agreement, relationship between the parties, and purpose of the cost-plus arrangement

3. Definitions: Definitions of key terms including 'Costs', 'Mark-up', 'Services', 'Transfer Pricing', and other relevant terms

4. Scope of Services: Detailed description of services to be provided under the agreement

5. Cost Calculation: Methodology for calculating applicable costs, including direct and indirect cost components

6. Mark-up Determination: Specification of the agreed mark-up percentage and its calculation basis

7. Invoicing and Payment: Terms for invoicing, payment procedures, currency, and payment timelines

8. Documentation Requirements: Requirements for maintaining documentation to comply with German transfer pricing regulations

9. Audit Rights: Rights of parties to audit cost calculations and supporting documentation

10. Term and Termination: Duration of the agreement and conditions for termination

11. Governing Law and Jurisdiction: Specification of German law as governing law and jurisdiction for disputes

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

1. Service Level Requirements: Specific service levels and performance metrics, used when detailed service standards need to be established

2. Intellectual Property Rights: Provisions regarding IP created or used during service provision, included when services involve intellectual property

3. Personnel: Terms regarding personnel providing services, included when specific staff requirements or restrictions apply

4. Confidentiality: Detailed confidentiality provisions, included when sensitive information is involved beyond standard business operations

5. Force Majeure: Provisions for unforeseen circumstances, included when specific risk allocation is needed

6. Transfer Pricing Adjustments: Mechanism for adjusting mark-up rates, included when periodic reviews and adjustments are anticipated

7. Subcontracting: Terms for subcontracting services, included when subcontracting is permitted

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

1. Schedule 1 - Service Description: Detailed description of all services covered under the agreement

2. Schedule 2 - Cost Components: Detailed list and description of all cost components included in the cost base

3. Schedule 3 - Calculation Methodology: Detailed methodology for cost allocation and mark-up calculation

4. Schedule 4 - Documentation Requirements: Specific documentation requirements and templates for cost reporting

5. Schedule 5 - Key Personnel: List of key personnel involved in service delivery and their roles

6. Appendix A - Transfer Pricing Benchmark Study: Supporting transfer pricing analysis justifying the chosen mark-up rate

7. Appendix B - Service Level Metrics: Detailed performance metrics and measurement methods

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

Germany

Publisher

Genie AI

Cost

Free to use

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