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Intercompany Cost Sharing Agreement

Intercompany Cost Sharing Agreement Template for India

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Key Requirements PROMPT example:

Intercompany Cost Sharing Agreement

"I need an Intercompany Cost Sharing Agreement for our Indian parent company and three domestic subsidiaries to share IT infrastructure costs, including cloud services and software licenses, with specific focus on GST treatment and transfer pricing compliance."

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Document background
The Intercompany Cost Sharing Agreement is essential for corporate groups operating in India who need to establish a formal framework for sharing costs between related entities. This document becomes necessary when multiple group entities share resources, services, or facilities and need a structured approach to allocate the associated costs. It addresses key Indian regulatory requirements including transfer pricing regulations under the Income Tax Act, 1961, related party transaction provisions under the Companies Act, 2013, and GST implications. The agreement is particularly relevant in the context of shared service centers, group-wide technology implementations, or any scenario where resources are centrally managed but costs need to be distributed across multiple entities. It provides detailed methodologies for cost allocation, ensures tax efficiency, and maintains compliance with Indian legal and regulatory frameworks.
Suggested Sections

1. Parties: Identification of the participating group companies, including their registration details and addresses

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

3. Definitions: Key terms used throughout the agreement, including 'Shared Costs', 'Cost Pool', 'Allocation Key', 'Participating Parties', etc.

4. Scope of Cost Sharing: Detailed description of which costs are to be shared under the agreement

5. Cost Allocation Methodology: Specific methodology for calculating and allocating costs among participating entities

6. Payment Terms: Timeline and method for settlement of shared costs, including currency and payment mechanics

7. Documentation and Records: Requirements for maintaining proper documentation to support cost allocations

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

9. Term and Termination: Duration of the agreement and circumstances under which it can be terminated

10. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction for dispute resolution

Optional Sections

1. Transfer Pricing Compliance: Detailed section on transfer pricing compliance - include when parties are in different tax jurisdictions

2. GST Treatment: Specific provisions regarding GST implications - include when shared costs include taxable supplies

3. Intellectual Property Rights: Provisions regarding IP ownership and usage - include when shared costs involve IP development or usage

4. Confidentiality: Provisions for protecting confidential information - include when sensitive cost information is shared

5. Force Majeure: Provisions for unforeseen circumstances - include when long-term cost sharing arrangements are contemplated

6. Change Control: Process for modifying cost allocation methodology - include when complex or dynamic cost sharing arrangements are involved

Suggested Schedules

1. Schedule 1 - Participating Entities: List of all group entities participating in the cost sharing arrangement

2. Schedule 2 - Shared Cost Categories: Detailed breakdown of costs to be shared under the agreement

3. Schedule 3 - Allocation Keys: Specific allocation percentages or formulas for each participating entity

4. Schedule 4 - Calculation Methodology: Detailed explanation of how costs will be calculated and allocated

5. Schedule 5 - Documentation Requirements: Templates and formats for cost sharing documentation

6. Appendix A - Service Level Agreement: If applicable, details of service levels related to shared resources

7. Appendix B - Compliance Checklist: Checklist ensuring compliance with transfer pricing and other regulatory requirements

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈË°æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
Relevant legal definitions

























Clauses




















Relevant Industries

Technology

Manufacturing

Financial Services

Pharmaceutical

Retail

Professional Services

Energy

Telecommunications

Automotive

Consumer Goods

Relevant Teams

Finance

Legal

Tax

Compliance

Treasury

Accounting

Shared Services

Corporate Development

Risk Management

Internal Audit

Relevant Roles

Chief Financial Officer

Finance Director

Tax Director

Legal Counsel

Company Secretary

Transfer Pricing Manager

Group Financial Controller

Compliance Officer

Head of Shared Services

Financial Planning Manager

Treasury Manager

Group Accountant

Corporate Finance Manager

Industries






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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