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Cost Pooling Agreement (intra-group)

Cost Pooling Agreement (intra-group)

PricewaterhouseCoopers AG

Date: January 23, 2018
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Author's Note

The Cost Pooling Agreement (intra-group) is a Swiss-law governed standard agreement for the... Read more

The Cost Pooling Agreement (intra-group) is a Swiss-law governed standard agreement for the pooling and re-allocation of costs incurred by multiple legal entities within a group of companies.

Costs are often pooled and re-allocated where they relate to functions or services that are performed by one or more entities, for the benefit of many entities within the group.  This template covers the pooling of costs in respect of (i) functions performed by specified staff (e.g. whose roles span multiple countries or business divisions); or (ii) services performed by one entity for the benefit of several other entities.

The template allows for additional group companies to join the pool at a future date, by signing an “accession form”.

Typically the parties will appoint a “pool leader” who will be responsible for overseeing the administrative and accounting processes required to implement the pooling and subsequent re-allocation of the costs.  This template assumes that the pool leader is also a member of the pool, and is not separately remunerated for the performance of its Pool Leader responsibilities.

Tax input should be sought as to whether the costs to be pooled should be subject to a mark-up to meet the arm’s length principle.

The template expressly excludes from the pool, those costs that are typically considered shareholder or stewardship costs, which may be treated differently from a tax and accounting perspective.

Terms which are configurable to the user’s needs include:

  • Purpose and background;
  • Services or functions included in the cost pool;
  • Mark-up (if any);
  • Term and termination;
  • Timing and process for pooling and re-allocation of costs;
  • Payment terms and allocation key;
  • Sub-contracting and assignment rights;
  • Provisions relating to notices; and
  • Dispute resolution, jurisdiction and arbitration.


Circumstances of Use

This template is intended to be used to document the establishment of a cost pooling arrangement between group companies, for transfer pricing purposes.

The Cost Pooling Agreement (intra-group) may be used for cross-border transactions where the parties have agreed to use Swiss law. 

Terms of Use

The purchase of this Product is subject to PartnerVine Terms.

You (the registered user through whose account the purchase is made) may:

  • Access the document-generation interview for 90 days from date of purchase;
  • Export and download an unlimited number of copies of the document(s) in Word or pdf format;
  • Share and use the document copies in connection with the circumstances described in this Author’s Note and only for the ordinary business purposes of the group of companies to which you belong.


Exclusions and Limitations

The Cost Pooling Agreement (intra-group) is drafted on the basis that costs will be submitted into the pool either quarterly or annually, and then re-allocated in accordance with an agreed split (“allocation key”). The allocation key needs to be manually added in a schedule. More complex arrangements may involve re-allocation on the basis of an initial allocation key, with a subsequent reconciliation process at the end of the year.  This template does not cover such arrangements.

The invoicing and re-allocation of costs between entities may attract VAT.  Specific tax advice should be taken as to the implications of establishing a cost-pool arrangement on the group’s VAT position.

Other Comments

No warranty or representation is given or made that the allocation of functions and risk and the related transfer pricing arrangements provided for in this document are appropriate in the specific circumstances of any given group of companies.  No legal or tax advice is provided and nothing in this template or the related user interview shall be deemed to constitute the provision of legal or tax advice in relation to any fact or matter. Where necessary, specialist legal and tax advice should be sought together with input from group accounting functions prior to executing this agreement.