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Intercompany Recharge Agreement

Intercompany Recharge Agreement Template for England and Wales

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Key Requirements PROMPT example:

Intercompany Recharge Agreement

"Need an Intercompany Recharge Agreement between our UK parent company and German subsidiary to cover IT infrastructure costs and shared service center charges, with specific focus on transfer pricing compliance and quarterly payment terms, to be effective from January 2025."

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Document background
The Intercompany Recharge Agreement is essential for corporate groups operating in England and Wales to formalize their internal cost allocation arrangements. This document is particularly important for ensuring transparent and compliant transfer pricing, managing shared resources efficiently, and maintaining clear financial boundaries between group entities. It addresses key aspects such as service definitions, charging methodologies, payment terms, and tax considerations, while adhering to relevant UK corporate and tax regulations.
Suggested Sections

1. Parties: Identification of the group companies involved in the recharge arrangement

2. Background: Context of the recharge arrangement and group relationship between the parties

3. Definitions: Key terms used throughout the agreement including Services, Charges, Group, Service Provider, Service Recipient

4. Services: Detailed description of services/costs being recharged and service delivery obligations

5. Charging Mechanism: Methodology for calculating recharges, including cost allocation basis and markup if applicable

6. Payment Terms: Timing and method of payments, including invoicing process and currency

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

8. General Provisions: Standard boilerplate clauses including governing law, entire agreement, and variation

Optional Sections

1. Employment Provisions: Provisions relating to staff costs, secondments, and employment responsibilities when staff costs are being recharged

2. Intellectual Property: Rights and obligations regarding IP usage between group companies when IP is involved in services

3. Tax Provisions: Specific tax treatment agreements, particularly relevant for cross-border arrangements

4. Data Protection: Provisions for handling personal data when data sharing is involved between group entities

5. Service Levels: Performance standards and metrics when specific service levels need to be maintained

Suggested Schedules

1. Schedule 1 - Service Description: Detailed description of all services being recharged including scope and exclusions

2. Schedule 2 - Pricing Schedule: Detailed cost allocation methodology, including calculation examples and any agreed markups

3. Schedule 3 - Service Levels: Performance metrics and KPIs if applicable to the services

4. Schedule 4 - Group Structure Chart: Diagram showing corporate relationship between the contracting parties

5. Schedule 5 - Pro Forma Invoice: Template for invoicing including required information and format

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

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alex.den.21@genieai.co
Relevant legal definitions
Affiliate
Agreement
Business Day
Charges
Commencement Date
Confidential Information
Cost Allocation Methodology
Direct Costs
Effective Date
Force Majeure Event
Group
Indirect Costs
Initial Term
Intellectual Property Rights
Mark-up
Operating Costs
Overhead Costs
Parent Company
Parties
Payment Date
Provider
Quarter
Recipient
Recharge Amount
Recharge Period
Services
Service Level Requirements
Shared Costs
Subsidiary
Support Services
Term
Territory
Transfer Pricing Documentation
VAT
Working Hours
Clauses
Interpretation
Scope of Services
Cost Allocation
Calculation of Charges
Payment Terms
VAT and Taxation
Transfer Pricing
Record Keeping
Audit Rights
Service Levels
Confidentiality
Data Protection
Intellectual Property
Liability and Indemnification
Force Majeure
Term and Termination
Change Control
Dispute Resolution
Notices
Assignment and Subcontracting
Entire Agreement
Variation
Severability
Waiver
Third Party Rights
Governing Law
Jurisdiction
Counterparts
Group Company Obligations
Financial Reporting
Industries

Corporation Tax Act 2009: Primary legislation governing corporate taxation in the UK, crucial for ensuring proper tax treatment of intercompany charges

Value Added Tax Act 1994: Legislation governing VAT treatment of intercompany transactions and service charges

TIOPA 2010: Transfer Pricing regulations ensuring arm's length pricing between related entities

Companies Act 2006: Primary company law legislation covering directors' duties, related party transactions, and corporate benefit requirements

Financial Services and Markets Act 2000: Regulatory framework for financial services activities and regulated transactions

Employment Rights Act 1996: Key employment legislation relevant when recharging staff costs between group companies

UK GDPR: Data protection regulation governing the processing and transfer of personal data between group entities

Data Protection Act 2018: UK's implementation of data protection requirements, complementing UK GDPR

Contracts (Rights of Third Parties) Act 1999: Legislation governing third party rights in contractual arrangements

Competition Act 1998: Framework for ensuring intercompany arrangements don't breach competition law requirements

Enterprise Act 2002: Additional competition law considerations for group arrangements

Double Tax Treaties: International agreements preventing double taxation, relevant for cross-border recharges

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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