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Intercompany Cost Plus Agreement

Intercompany Cost Plus Agreement Template for Canada

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Key Requirements PROMPT example:

Intercompany Cost Plus Agreement

"I need an Intercompany Cost Plus Agreement for our Canadian subsidiary providing IT support services to our group companies, with a 5% markup and monthly billing starting January 2025."

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Document background
The Intercompany Cost Plus Agreement is essential for corporate groups operating in Canada where one entity provides services to related entities. This document is typically used when establishing shared services arrangements, management services, or technical support services between affiliated companies. It ensures compliance with Canadian transfer pricing regulations, particularly Section 247 of the Income Tax Act, by documenting the cost base, markup methodology, and arm's length nature of the arrangement. The agreement is crucial for tax compliance, audit defense, and maintaining proper intercompany relationships. It should be implemented when regular, ongoing services are provided between related entities and updated periodically to reflect changes in service scope or cost structures.
Suggested Sections

1. Parties: Identification of the service provider and service recipient entities

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

3. Definitions: Key terms including 'Services', 'Costs', 'Markup', 'Service Fee', and other relevant definitions

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

5. Cost Calculation: Definition of cost base and includable/excludable costs

6. Markup: Agreed markup percentage and justification for arm's length nature

7. Service Fees and Payment: Calculation method, invoicing, and payment terms

8. Documentation and Records: Record-keeping requirements for tax compliance

9. Term and Termination: Duration and termination provisions

10. Confidentiality: Protection of confidential information

11. Governing Law: Specification of Canadian law and jurisdiction

Optional Sections

1. Service Levels: Include when specific performance standards need to be maintained

2. Intellectual Property: Include when services involve creation or use of IP

3. Tax Gross-Up: Include when cross-border services may trigger withholding tax

4. Force Majeure: Include when service interruption risks need to be addressed

5. Dispute Resolution: Include when specific internal resolution procedures are needed

6. Audit Rights: Include when regular audit of costs is required

7. Resources and Personnel: Include when specific personnel or resources are critical to service delivery

Suggested Schedules

1. Schedule A - Services Description: Detailed list and description of services to be provided

2. Schedule B - Cost Components: Detailed breakdown of cost categories and calculation methodology

3. Schedule C - Markup Analysis: Transfer pricing support for chosen markup percentage

4. Schedule D - Service Levels: Specific performance metrics and standards if applicable

5. Schedule E - Allocation Keys: Methods for allocating shared costs if relevant

6. Appendix 1 - Form of Invoice: Template for monthly/periodic invoicing

7. Appendix 2 - Contact Details: Key personnel and escalation contacts

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

Manufacturing

Technology

Financial Services

Professional Services

Healthcare

Energy

Retail

Telecommunications

Pharmaceutical

Automotive

Mining

Real Estate

Relevant Teams

Legal

Finance

Tax

Treasury

Compliance

Shared Services

Operations

Commercial

Corporate Development

Risk Management

Internal Audit

Relevant Roles

Chief Financial Officer

Tax Director

Legal Counsel

Transfer Pricing Manager

Finance Manager

Corporate Controller

Compliance Officer

Treasury Manager

Financial Planning Analyst

Shared Services Manager

Group Financial Controller

Head of Tax

Commercial Director

Operations Manager

Chief Legal Officer

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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