What is a cost-sharing agreement?
Transfer pricing studies have shown that through the proper utilization of intercompany transactions, cash flow can be increased while also reducing tax liabilities.
However, cost-sharing agreements can further the same principles between companies to take maximum advantage of varying tax brackets. Cost-sharing contracts work on the fundamental tax advantage of replacing estimated market prices with incurred costs. This can result in a dramatic change in tax liabilities for both companies.
What can be included in cost-sharing agreement?
Cost-sharing agreements are as wide and varied as the companies that make the cost-sharing contracts. They specify what is qualified under their agreement while staying within all international tax codes, including Sections 482 and 6662.
Typical information found in a cost sharing agreement includes the following:
- Shared personnel
- Shared equipment
- Shared facilities
- Method of payment
- Calculation of payment
- Dates of payments
- Termination policies
Cost sharing contracts provide a unique opportunity to increase cash flow, decrease tax bases, and put contingencies in place for allocating shared cost across companies.
A cost sharing agreement should never be entered into lightly.
PIASCIK can show you how cost-sharing agreements save money
PIASCIK can provide expert advice on all venues of cost-sharing agreements. PIASCIK, the largest international tax firm south of D.C. and north of Charlotte, NC, provides expert advice on cost sharing agreements with clients being represented in over 49 countries.
Our international tax professionals have over 75 years of combined expertise on international tax matters, including IC-DISC, FBAR filings, OVDI filings and transfer pricing studies. PIASICK professionals include international tax experts who have been recognized as industry leaders, such as the President of the Virginia International Business Council (VAIBC), Treasurer of the Society of International Business Fellows (SIBF) and Program Partner with the Virginia Leaders in Export Trade (VALET). In fact, PIASCIK is so confident you will be satisfied with our world class service, PIASCIK offers the initial consultation completely FREE with absolutely no obligation from you. PIASCIK even provides flat rate fees as economical alternatives to the expensive charges of large international tax firms.
Contact PIASCIK today and discover why so many clients have chosen our expert advice on everything related to international tax matters.
