Intercompany Service Agreements Between German and US Group Companies – Legal Requirements at a Glance

Within international groups, companies continuously provide services to one another – from IT and accounting to HR functions and management and advisory services. Where such services are exchanged between a German and a US group company, proceeding “on an ad hoc basis” is not sufficient; a written intercompany service agreement (Intercompany-Servicevertrag) is required that meets the requirements of both legal systems.

1. Services, Remuneration and Term

At its core is a precise description of the services owed and the responsibilities, together with remuneration that corresponds to what independent third parties would have agreed – a comprehensible remuneration mechanism (such as cost-plus) and clear provisions on invoicing and documentation are indispensable for this.

Provisions on term, termination and transitional services are equally part of the agreement, so that the supply to the recipient company does not break off in the event of a restructuring or a sale.

2. Corporate-Law Limits Under German Law

§ 30 Abs. 1 GmbHG prohibits the payout to shareholders of the assets required to maintain the share capital (Stammkapital); services to a US parent company without full consideration can therefore constitute a prohibited payout and trigger reimbursement claims under § 31 GmbHG.

The same applies correspondingly to the stock corporation (Aktiengesellschaft) via § 57 AktG; in the de facto group (faktischer Konzern), moreover, every disadvantage caused must be compensated under §§ 311, 317 AktG and the agreement must be recorded in the dependency report (Abhängigkeitsbericht) under § 312 AktG.

The management (Geschäftsführung) of the German company is personally liable under § 43 Abs. 2 GmbHG or § 93 Abs. 2 AktG if it enters into inappropriate group agreements; in the case of interferences that threaten the company’s existence, the shareholder may in addition be liable for destruction of the company’s existence (Existenzvernichtungshaftung) under § 826 BGB (BGH, Urteil vom 16.07.2007 – II ZR 3/04, “Trihotel”).

3. Data Protection and Data Transfers to the USA

Where the service involves access to personal data – for example in centralised HR or IT services – a data processing agreement (Auftragsverarbeitungsvertrag) under Art. 28 of the General Data Protection Regulation (Datenschutz-Grundverordnung, DSGVO; “GDPR”) or an agreement on joint controllership under Art. 26 GDPR is generally required.

For transfers to the USA, a transfer basis under Art. 44 et seq. GDPR is additionally required, in particular a certification of the US recipient under the EU-U.S. Data Privacy Framework or the EU Standard Contractual Clauses together with a transfer impact assessment; the GDPR does not recognise an intra-group privilege (Konzernprivileg).

4. Further Areas to Be Regulated

Where employees of one company are deployed at the other, the Temporary Employment Act (Arbeitnehmerüberlassungsgesetz, AÜG) must be observed; the intra-group privilege under § 1 Abs. 3 Nr. 2 AÜG applies only if the employee is not hired and employed for the purpose of being assigned.

Confidential information must be protected by non-disclosure agreements, since the statutory protection under § 2 Nr. 1 lit. b GeschGehG (Trade Secrets Act, Geschäftsgeheimnisgesetz) requires reasonable confidentiality measures; in addition, rights of use in work results and intellectual property must be clearly allocated.

5. Choice of Law, Jurisdiction and Liability

The parties may freely choose the applicable law pursuant to Art. 3 of the Rome I Regulation (Rom I-VO); the place of jurisdiction or an arbitration clause as well as a jury trial waiver should be expressly agreed in order to avoid costly proceedings before US courts involving discovery.

Under German law, the review of standard terms and conditions (AGB-Kontrolle) under §§ 305 ff., 310 Abs. 1 BGB applies even between businesses, so that far-reaching exclusions of liability taken from US templates may fail under § 307 BGB; an exclusion of liability for intent is in any event impermissible under § 276 Abs. 3 BGB.

Conclusion

A carefully drafted intercompany service agreement protects the management from personal liability, safeguards capital maintenance and creates legal certainty for cross-border data transfers.

We support groups in the drafting and review of such agreements, taking into account German and US law.