Cost Contribution Agreements

B.6.1.6. In the case of service-sharing agreements, for example, an MNE may decide to centralize its personnel operations or IT functions within a related company so that participants share the costs of providing these services. The advantage of intragroup CCAs is that they provide participants with economies of scale, resulting in a reduction in the proportional cost of these services compared to the fact that each participant provides services in-house. For example, an MNE group may decide to have its IT services offered by a participant in a low-cost country that has a well-established history as an international leader in information technology. The centralization of information technology allows the group to access high-quality IT services, which are provided at a lower cost by economies of scale and potential economies of scale. The calculation aspects related to the CCAs/CSAs are also on the account of certain disputes. These are done in the form of a study: (a) if the cost pool calculation is correct, i.e. if all CCA-related costs have been correctly determined and taken into account; and (b) the distribution of costs between participants is carried out on appropriate pilots or allocation keys and based on the share of participants in the expected benefits. B.6.7.6. When new participants join a CCA or existing participants leave a CCA, an adaptation of the contributions of retained participants may be necessary to reflect changes in their share of expected future achievements. B.6.4.7. In some cases, budgeted costs can be used to assess contributions.

Budgeted costs may be justified on the basis that contributions to a CCA reflect the expected benefits. In general, there are differences between budgeted and actual costs in a CCA. A key question, therefore, is to determine which participants are responsible for the risk that the actual costs will be higher or lower than the estimated costs. The poorest parties of length will generally explain how to manage the differences between budgeted and actual costs. In addition, it is likely that the independent parties will agree on the factors taken into account in the evolution of the budget and on how to deal with unforeseen anomalies. If there are significant differences between budgeted and actual costs, the reasons for these differences should be examined to ensure that the CCA has not been significantly modified, so that the amendments do not benefit some participants. B.6.4.5. Although all contributions to value are assessed on the principle of arm length, it may be easier for participants to measure current contributions to thought costs. If this approach is adopted, the value attributed to existing contributions should recover the opportunity costs of ex ante`s obligation to pay through costs within the CCA.