Infortrend Germany optimizes operations with ConsultinghouseRead More
Many companies have significantly expanded their global footprints, building multinational value chains that generate an enormous volume of intercompany transactions. Operating in multiple countries introduces the need for compliance with country-specific regulations and tax policies. There is a growing level of regulatory scrutiny, and regulators are increasingly focusing their attention on the cross-border transactions of multinationals.
Intercompany transactions arises when the unit of a legal entity has a transaction with another unit within the same entity. Many international companies take advantage of intercompany transfer pricing and other related party transactions to influence cash-flow, promote improved intercompany transaction taxes, and effectively enhance efficiency within the company. Intercompany transactions can be essential to maximizing the allocation of income and deductions. Here are a few examples of intercompany transactions:
- Two departments
- Two subsidiaries
- Parent company and subsidiary
- Two divisions
Intercompany transactions can help improve the flow of finances and assets greatly. Transfer pricing studies can help ensure intercompany transfer pricing falls within arms length pricing to help avoid unnecessary audits. Intercompany transactions accounting can help keep records for resolving tax disputes, especially in countries where the markets are new and there are little or no regulations governing related party transactions. Here are few areas affected by the use of intercompany transactions:
- Loan participation
- Sales and transfer of assets
- Insurance policies
- Transactions with member banks and affiliates
- Management and service fees
Intercompany accounting (ICA) refers to the processing and accounting for internal financial activities and events that impact multiple legal entities within a company. ICA can include sales of products and services, fee sharing, cost allocations, royalties and financing activities. It’s a broad area that, while rooted in accounting, has extensions into various functions, including operations, reporting and finance.
Based on extensive industry experience working with ICA in a wide range of companies globally, Consultinghouse Intercompany Advisory has identified a set of leading practices. These practices seek to address the common challenges of ICA, including insufficient or poor use of technology, non-standardised processes and difficulties with transaction matching and account reconciliation.
We support our international clients with the following ICA disciplines:
- Governance and policies
- Intercompany pricing
- Data management
- Transaction management
- Netting and settlement
- Reconciliation and elimination:
- Strong experience in supporting foreign companies to develop their business in Germany
- Our clients success is our success. Our objective is to grow along our clients
- We are family owned. Our long- term perspective allows for good strategy and decision-making
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