When Risk Arises

• when companies provide services to each other (e.g., accounting, marketing)

• during cost reallocation (e.g., rent, energy, software)

• when employees or projects are moved between firms

• when loans or advances are given

• when assets are shared (vehicles, offices, machinery)

What Tax Auditors Check

• whether contracts and invoices exist

• if prices are market-based and fair

• whether one company is artificially favored

• whether transactions are provable and documented

• if taxes or accounting rules are being circumvented

What a Proper Contract Should Include

Each parent-subsidiary or group relationship should be documented. Examples include:

• service agreements

• license or IP agreements

• intercompany loans

• rental or co-use agreements

• cost-sharing arrangements

• employee loan agreements (including salary allocation)

Common Mistakes

• no written agreement – just internal transfers

• zero or artificially low pricing

• incorrect VAT or accounting treatment

• reallocation without real basis

• unclear or sham transactions

Lawyer’s Advice

“Even if you own both companies, you can’t run them informally. Every transaction must be traceable, reasonable, and market-based. Otherwise, you risk tax penalties – or even criminal liability in serious cases.”