Intra-group services refer to services provided by one company or business division to another associated entity within the same corporate group.
Key Characteristics:
- Include support functions offered across affiliates like IT, legal, HR, payroll
- May also cover shared production, R&D or infrastructure usage
- Charged through service agreements at arm’s length transfer prices
- Aim to reduce costs through economies of scale within group networks
- Requirements and scope are tailored to each corporate relationship
Example:
A conglomerate’s engineering division handled specialized equipment maintenance for subsidiaries internationally via intra-group servicing agreements.
Significance:
Properly structured intra-group services can help optimize group-wide resource allocation if pricing yields fair market value benefits for various tax and transfer pricing regulations.