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Cost Pooling Agreement (intra-group)

Cost Pooling Agreement (intra-group)

PricewaterhouseCoopers AG

Date: February 18, 2021

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.

PV10083
$314.70

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....

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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.



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Frequently asked questions

Why do we refer to the parent company in the cost-pooling agreement?

The parent company of the group is referred to in the cost pooling arrangements to exclude costs typically considered to be “shareholder costs”.

What does a cost pool cover?

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.

What if cost pooling has already commenced?

If cost pooling already commenced, the agreement will have retrospective effect.

Can the pooling leader change pool administration?

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. 

Who performs administrative or accounting functions?

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.

Which accounting policies for costs may be used?

Swiss GAAP, US GAAP or the established cost accounting standard.

How long is the notice period for termination? Is it the same for the pool leader and the pool members?

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.

When should assignments be permitted?

The default position under this agreement is that no assignment is permitted. However, it may be appropriate to allow assignment within the group.

Can notices be sent via e-mail? And who is to be specified as the receiver of the notices?

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.

What methods of dispute resolution exist?

You may choose to resolve disputes in court or through arbitration.

What happens if no place of jurisdiction is specified?

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.


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Initial coin offerings (ICOs) in Liechtenstein

An initial coin offering (ICO) or a token sale is when a company sells a predefined number of digital tokens to the public in a limited period of time. The ICO market has grown very rapidly in recent months and has been a new avenue for blockchain-based start-ups and projects to get the funding needed to launch their projects.

Partial entry into force of the Swiss DLT-act

On 1 February 2021, the parts of the Swiss DLT-act that introduce ledger-based securities (i.e. register uncertificated securities) to Swiss law have entered into force. The remaining provisions of the DLT-act will enter into force on 1 August 2021.

The E-ID Act from a data protection perspective

On 7 March, the E-ID Act will be put to the vote in Switzerland. Especially in the area of data protection, opponents and supporters disagree on the extent to which the introduction of the law would cause problems.

Platform Economy: Prepare for the future and outshine with an online matchmaker

Platform business models has changed how businesses are conceptualised and conducted. Interested to know more about the value of a platform business model?

A unique opportunity to become a responsible business role model

With the narrow rejection of the Swiss Responsible Business Initiative (RBI), Swiss companies will have the challenge of aligning with stricter, EU-inspired standards in terms of corporate disclosure and sectoral human rights due diligence. In this blog post we explain how you can take the reins and become best in class – and why the current...

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