Document background
The Intercompany Recharge Agreement is essential for corporate groups operating in Germany who need to formalize their internal cost allocation and service charging arrangements. This document becomes necessary when one group entity provides services or incurs costs that need to be allocated to other group entities. It is particularly important in the German regulatory environment, where strict transfer pricing rules and documentation requirements apply. The agreement helps ensure compliance with German tax laws, particularly the arm's length principle required by the Außensteuergesetz, while providing a clear framework for calculating and documenting intercompany charges. It includes detailed provisions for service scope, cost allocation methodologies, markup calculations, and compliance requirements, making it a crucial tool for managing intercompany relationships and maintaining tax efficiency.
