How to set up intercompany rates in VOGSY

Intercompany transfer pricing for professional services, such as those working on projects for other companies within the same multinational group, refers to the pricing arrangements used for these intra-group services. The fundamental principle is to ensure that these prices are set at "arm's length," meaning they reflect the prices that would be charged if the services were provided to an independent, unrelated company in the open market. 

It ensures the fair allocation of costs and profits among different entities within the multinational group. Accurate transfer pricing provides a true picture of each entity's performance, facilitating effective management and decision-making.

To enable intercompany transfer pricing in VOGSY, switch on intercompany cost rates in the accounting settings in the back office.

After that, the option to enter an intercompany cost rate individually per employee appears. You can fill in the intercompany transfer price, which will be booked when that employee tracks time on a project from another company in VOGSY.

The actual transfer pricing can be done in 2 ways:

• Though journal entries with which the intercompany cost rate is booked between companies using current accounts

• Or by sending invoices between companies based upon the hours booked on other companies at intercompany cost rate values.