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Intercompany Loan Agreement for the United States

Intercompany Loan Agreement Template for United States

An Intercompany Loan Agreement is a legally binding contract that governs the terms and conditions of a loan between affiliated companies within the same corporate group. Under U.S. law, this agreement must comply with federal and state regulations, particularly regarding transfer pricing, thin capitalization rules, and tax implications. The document establishes the loan amount, interest rate, repayment terms, and various provisions to ensure compliance with IRS regulations and corporate governance requirements.

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Intercompany Loan Agreement

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What is a Intercompany Loan Agreement?

The Intercompany Loan Agreement is essential for corporate groups seeking to establish formal lending arrangements between affiliated entities. This document is particularly relevant when companies need to document internal financing in compliance with U.S. transfer pricing regulations and IRS requirements. It's commonly used for various purposes including operational funding, expansion projects, or restructuring efforts. The agreement must carefully balance tax efficiency with regulatory compliance, particularly regarding interest rates and terms that meet arm's length standards. Proper documentation is crucial for audit purposes and to demonstrate compliance with both federal and state requirements governing related-party transactions.

What sections should be included in a Intercompany Loan Agreement?

1. Parties: Identification of lender and borrower entities, including registration details

2. Background/Recitals: Context of the loan and relationship between parties

3. Definitions: Key terms used throughout the agreement

4. Loan Amount and Purpose: Specification of principal amount and intended use

5. Interest: Interest rate, calculation method, and payment terms

6. Repayment Terms: Schedule, method, and conditions of repayment

7. Representations and Warranties: Standard assurances from both parties

8. Events of Default: Circumstances constituting default and consequences

9. Governing Law: Applicable jurisdiction and dispute resolution

What sections are optional to include in a Intercompany Loan Agreement?

1. Security: Details of any collateral when loan is secured

2. Subordination: Priority ranking of the loan when other creditors exist

3. Tax Provisions: Treatment of withholding and other taxes for cross-border loans

4. Currency Provisions: Exchange rate considerations for multi-currency loans

What schedules should be included in a Intercompany Loan Agreement?

1. Repayment Schedule: Detailed timeline of repayment obligations

2. Interest Calculation Examples: Illustrations of interest calculations

3. Corporate Authorizations: Board resolutions and other approval documents

4. Transfer Pricing Documentation: Evidence of arm's length terms if required

5. Security Documents: If applicable, details of any security arrangements

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 | Serial Founder & Legal AI Author

Jurisdiction

United States

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use
Clauses






























Industries

Securities Act of 1933: Federal law that must be considered if the intercompany loan could be characterized as a security, requiring registration or qualifying for exemption

IRC Section 482: Internal Revenue Code section governing transfer pricing regulations for transactions between related entities

IRC Section 385: Internal Revenue Code section providing rules for distinguishing between debt and equity in related party financing arrangements

State Usury Laws: State-specific regulations that set maximum allowable interest rates for loans

Uniform Commercial Code: State-adopted standardized laws governing commercial transactions, including secured lending

IRS Related-Party Transaction Rules: Regulations governing the tax treatment and documentation requirements for transactions between related entities

GAAP Standards: Generally Accepted Accounting Principles governing the accounting treatment of intercompany loans

ASC 850: Accounting Standards Codification requirements for related party transaction disclosures

FATCA: Foreign Account Tax Compliance Act requirements if international entities are involved in the loan arrangement

Sarbanes-Oxley Act: Corporate governance requirements for public companies involved in intercompany loans

Transfer Pricing Documentation: Requirements for documenting and justifying the terms of related-party transactions, including interest rates

State Corporate Lending Laws: State-specific regulations governing corporate lending activities and requirements

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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