Written agreements are important

We recommend putting agreements in writing. You should agree on terms as if you were independent parties.

It will facilitate the dialogue with us if your agreements:

• are in writing
• have been entered into prior to the transaction
• have clear conditions

You use written agreements as evidence of the agreement’s content towards third parties. Written agreements are also the starting point for delineating controlled transactions which is part of the comparability analysis.

We use agreements as a basis in risk assessments, dialogues with the company, and in audits.

When to enter into and update your agreements

You should enter into an agreement before the transaction takes place. You must update the agreement if the nature of the transaction changes.

Discrepancies between the terms of agreement and how the agreement is implemented

If there are discrepancies between the terms of the agreement and how the agreement is implemented, we place emphasis on the parties' behaviour.

Content of agreements

You must prepare agreements for controlled transactions as if they were entered into with an independent party. At a minimum, the agreement should describe:

• which parties are involved
• the date from which the agreement takes effect and the duration of the agreement
• what the individual parties contribute with in the transaction
• which benefits have been agreed on
• what conditions apply to payments
• how prices are determined
• how various risks associated with the agreement are managed
• conditions relating to changes to the agreement
• conditions relating to deviations from the agreement
• sanctions in the event of breaches of the agreement
• conditions for the termination of the agreement
• jurisdiction - which country's law applies to the agreement

Consequences of not putting agreements into writing

It’s difficult to provide evidence of an agreement’s content after a transaction if there is no written agreement at the time of the transaction. This can lead to a more challenging dialogue with us because:

• You must conduct a comprehensive review of the company and accounting information. Documents from the company's board of directors may, for example, shed light on agreement terms.
• It’s difficult to recreate important information that has not been written down when, for example, personnel who were involved in the planning have left the company.

Documentation that was created at or very soon after a transaction (contemporaneous evidence) is given the greatest weight in an audit situation. Documentation or explanations that are created afterwards may be considered attempts to adapt agreements to what is actually happening.