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Indirect Cost Agreement
"I need an Indirect Cost Agreement for allocating shared IT and administrative costs between our Dutch parent company and three European subsidiaries, with implementation planned for March 2025, ensuring compliance with both Dutch and EU transfer pricing regulations."
1. Parties: Identification of the contracting parties, including full legal names and registration details
2. Background: Context of the agreement, business relationship, and purpose of the indirect cost allocation
3. Definitions: Detailed definitions of terms, including types of indirect costs, allocation keys, and calculation periods
4. Scope of Agreement: Details of what costs are covered and the business activities to which they relate
5. Cost Categories: Classification and description of different types of indirect costs covered by the agreement
6. Allocation Methodology: Detailed explanation of how indirect costs will be calculated and allocated between parties
7. Calculation Period and Timing: Specification of the periods for cost calculation and timing of allocations
8. Payment Terms: Terms and conditions for payment of allocated costs, including invoicing procedures
9. Reporting Requirements: Requirements for reporting and documentation of indirect costs
10. Audit Rights: Provisions for auditing and verification of cost calculations
11. Confidentiality: Provisions regarding the confidentiality of cost information and business data
12. Term and Termination: Duration of the agreement and conditions for termination
13. Governing Law and Jurisdiction: Specification of Dutch law as governing law and jurisdiction for disputes
14. General Provisions: Standard legal provisions including amendments, assignments, and notices
1. Transfer Pricing Compliance: Required when agreement is between related entities and must comply with transfer pricing regulations
2. Tax Gross-Up: Optional section for cases where tax implications need to be addressed in the cost allocation
3. Service Level Requirements: Needed when indirect costs relate to specific service levels or performance metrics
4. Force Majeure: Optional inclusion for handling cost allocation during extraordinary circumstances
5. Step-In Rights: Required when one party needs rights to take over certain functions in specific circumstances
6. True-Up Mechanisms: Optional section for adjusting cost allocations based on actual versus estimated costs
7. Data Protection: Required when cost allocation involves processing of personal data under GDPR
1. Schedule 1 - Cost Categories and Allocation Keys: Detailed list of indirect cost categories and specific allocation keys for each
2. Schedule 2 - Calculation Methodology: Technical details of cost allocation calculations and formulas
3. Schedule 3 - Reporting Templates: Standard templates for regular cost reporting and documentation
4. Schedule 4 - Service Levels: Detailed service levels and performance metrics if applicable
5. Schedule 5 - Contact Details: List of key contacts for cost allocation administration and disputes
6. Appendix A - Sample Calculations: Examples of cost calculations for different scenarios
7. Appendix B - Required Documentation: List of documents required for cost verification and audit
Authors
Manufacturing
Professional Services
Technology
Financial Services
Healthcare
Retail
Energy
Telecommunications
Logistics
Construction
Pharmaceutical
Consumer Goods
Finance
Legal
Tax
Compliance
Treasury
Accounting
Corporate Development
Operations
Shared Services
Internal Audit
Financial Planning & Analysis
Risk Management
Chief Financial Officer
Financial Controller
Cost Accounting Manager
Transfer Pricing Specialist
Legal Counsel
Tax Director
Finance Manager
Operations Director
Shared Services Manager
Group Controller
Compliance Officer
Treasury Manager
Corporate Finance Director
Business Unit Manager
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