Cost Allocation Agreements

On the other hand, with respect to cost-sharing agreements with foreign-based companies, the federal product has generally positioned itself using the transfer by IRFONTE (15%), pis/COFINS-Import (9.65%), CIDE (10%) Taxed. AND the ISS. Although decisions generally find that they have not found an effective distribution in some cases, this is a reason for the application of taxes. Conversely, the federal product recognized the deduction or the right of credit for these expenses and expenses. 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. (ii) sales and sales contracts (there is no transfer of an asset or property with the payment of a price); in Brazil, it can be said that reimbursements under cost-sharing agreements concluded by domestic companies are not taxed under the IRPJ/CSLL, pis/COFINS and the ISS, provided certain conditions are met, and that these fees are deductible or allow credits in relation to the taxes in question. (i) technology transfer contracts (these contracts are often reimbursements for administrative expenses, not technical services); (iii) service agreements (there is often compensation with a profit margin, while cost-sharing agreements are not entitled to profit, but only to reimbursement). Ultimately, the actual circumstances will be decisive in the correct definition of the functions covered by the various agreements concluded and the costs incurred in this context. The agreement can be used for their documentation, but ultimately not for the agreement, but the actual circumstances will be decisive. Instead of a service-by-service approach to determine the price of the length of the armament service for each service, it is permissible to calculate qualified LVAS on a cost-plus basis on the basis of an appropriate distribution key with a 5% premium.

A cost-sharing agreement is concluded if, with common interests, there are costs for the respect of the assets and rights of one of the group`s companies – which they make available to others – according to justified distribution criteria. A cost contribution would be, given the fruitification, a means of repaying the costs to the entity that owns the right or asset. Direct Service Charges The costs that must be allocated to services, which can be identified separately and which, as such, do not fall within the above categories, must essentially be compensated individually. A typical example of these specific services is management services (formerly directly related to shareholder activity or oversight of low-value-added services). This type of service can be covered by an administrative fee calculated on the basis of real time multiplied by a reasonable hourly rate and the costs incurred. The nature of the services and the circumstances of the delivery of these services (functional analysis) are critical in determining the most appropriate method of compensation.