Cost Sharing Agreement Vertalen

Table 1 shows the differences between service agreements and cost-sharing agreements. Although the nature of these contracts is discussed, it is possible to identify at least three distinctive characteristics between the parties based on the structured structure: (i) cost-sharing agreement; (ii) intragroup service agreement; and (iii) cost-contribution agreement. (iii) service agreements (there is often compensation with a profit margin, while cost-sharing agreements are not entitled to profit, but only to reimbursement). Therefore, it is clear that either an effort, cost or contribution agreement is made by companies to share and allocate the costs or expenses incurred by one of them, to the benefit of all the companies in the group involved in the production of goods, services or rights. The cost-sharing agreement is generally the result of the need for optimization, efficiency, cost reduction and performance standardization. Within an economic group, a parent company or a company created for this purpose (a common service centre) can agree on the cooperation of certain aspects. This may include the distribution of expenses and costs resulting from activities not related to the core business, such as accounting, marketing and legal services, as well as research and development. It is important to point out from this judgment that in the event of cost-sharing as a result of the central company`s commitment of a third-party service provider, such an assumption would not be an easy refund and would, as a service, lead to taxing transfers sent abroad. In Brazil, it can be said that reimbursements under cost-sharing agreements made by domestic companies are not taxed under the IRPJ/CSLL, PIS/COFINS and ISS, provided certain conditions are met and these expenses are deductible or tax credits are available. Under such conditions, there are still doubts and controversies. However, if there is an effective cost-sharing agreement with the respective controls, we believe that, whether by decision of the Federal Finance Tribunal, the administration or the court, there will be the impossibility of taxation.

In our view, the Brazilian tax authorities are not entitled to tax transfers sent abroad as part of a cost-sharing agreement with non-resident companies, because „it is possible to concentrate control of the costs associated with centralized administrative services in a single company on the subsequent distribution of common administrative costs and expenses between companies that do not maintain the concentrated management structure.

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