Cost Pooling Agreement (intra-group)
PricewaterhouseCoopers AG
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.
Author's Note
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....
Read moreThe 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.
Ask a lawyer
If you have a question for PricewaterhouseCoopers AG, you can post it here. PricewaterhouseCoopers AG will receive notice of your comment.
Please do not post confidential information. Your question and PricewaterhouseCoopers AG's answer will be publicly posted in the frequently asked questions section on this page. You will need to sign in or register with PartnerVine to ask your question.
Frequently asked questions
The parent company of the group is referred to in the cost pooling arrangements to exclude costs typically considered to be “shareholder costs”.
A cost pool can cover (1) a provision of specified services where you will be able to specify the services performed by each entity for which the costs are to be pooled or (2) the performance of functions by identified staff which may be appropriate if the costs to be pooled relate to certain key roles that span business segments or legal entities.
If cost pooling already commenced, the agreement will have retrospective effect.
Yes, pooling administration changes can be made unilaterally if stated in the contract. This gives more flexibility in reaction to changing circumstances. Otherwise, they have to be agreed between all parties.
They can be performed by the Pool Leader, f.ex. accounting tasks may be performed by the group’s shared finance function. If the latter is the case, this must be stated in the contract.
Swiss GAAP, US GAAP or the established cost accounting standard.
The notice period for termination can be either three months, six months or specifically stated. This must be noted in the agreement. Moreover, termination notice can be different for the Pool Leader and the Pool Members.
The default position under this agreement is that no assignment is permitted. However, it may be appropriate to allow assignment within the group.
Yes, in an intra-group agreement, the parties may have more flexibility if email qualifies as writing (e.g. for the purposes of “written notice”). This must be specified in the agreement and may even allow termination. It is good practice to specify who is able to receive or send notices. Moreover, inserting a title is recommended, rather than an individual's name (e.g. "the Finance Director"), as roles and responsibilities change over time.
You may choose to resolve disputes in court or through arbitration.
This agreement is governed by Swiss law. If you do not specify the place of jurisdiction, any court which is competent under Swiss law will have jurisdiction to resolve a dispute.