Legal agreements should reflect an agreement that the directors of each participating company can properly approve in order to promote the interests of that particular company. (Agreements that result in current losses in a given business can be problematic.) This fundamental principle, which focuses on the legal obligations of managers, can, in many respects, be considered in a legal context as the general principle of harmonizing form and content. See, for example, Action Point 9 of the OECD Action Plan on Profit Reduction and Profit Shifting of 19 July 2013, which sets the following objective: “Develop rules to prevent beps by transferring risk between group members or by allocating excessive capital to group members. This involves the adoption of transfer pricing rules or special measures to ensure that a company does not generate inappropriate returns simply because it has taken contractual risks or provided capital. The contractual assumption of risks by a company that does not have the economic substance to bear them is probably not an agreement that the company`s directors can properly approve. The best way to establish an intercompany agreement is to take a multidisciplinary approach. Tax and financial experts prepare transfer pricing documentation, but may not have the skills to prepare legal documents. Similarly, lawyers are generally ignorant of transfer pricing rules. It is therefore important that the right people and skills are on board. 2. Consistency with functional analysis: verify that the contractual conditions are in line with the functional analysis that underpins the transfer pricing policy that the group intends to conduct. With regard to the content of intercompany agreements, we stress three key principles: one day, the tax authorities will knock on the door to inquire about transfer pricing agreements and their documentation. Pjotr Plastic informs them that there is documentation on transfer pricing, but no intercompany agreement proves that all related companies have accepted the transfer pricing agreements.
From a legal point of view, a permanent establishment is not a separate entity from its “parent company” or registered office. It may be subject to local registration requirements (e.g. .B. at Companies House), but it is still the same entity. A person cannot enter into a contract with himself and, therefore, a legal agreement between a “parent” and his own branch would be void. From a tax point of view, however, it may be useful to divide deliveries and profits between the head office and the establishment. To document it, it would be appropriate to refer to the key terms of a memorandum (which can be signed) rather than trying to support the fiction that a contract was drafted. . .