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Intercompany Pricing

Structuring management charges and cost-sharing arrangements.

TRANSFER PRICINGMarch 2026 · 6 min read

Common Intercompany Flows

Flow Type VAT TP Risk Key Issue
Management fees 10% / RC High Must quantify benefit received
IT shared services 10% / RC Medium Cost-plus or user-based allocation
Royalty/brand fees 10% / RC High Arm's length benchmark needed
Secondment charges 10% Medium Cost vs value-based pricing
Intercompany loans Exempt High Interest rate benchmarking
Cost recharges Depends Low Disbursement vs principal analysis

Documentation Tips

📋 Intercompany Agreements

Written agreements for every intercompany transaction. Define services, pricing methodology, and payment terms. Review annually and update for changes.

📊 Benchmarking

Comparable uncontrolled pricing (CUP) is ideal. Cost-plus (typically 5-10% markup) for routine services. TNMM for complex, multifaceted arrangements.

📂 Master File & Local File

Under DMTT, transfer pricing documentation will be essential. Start building your master file and local file now to be ready for Pillar Two compliance.

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