5. determination of the allocation key 6. description of how the value of the initial and the later service contributions of the pool members will be determined and allocated coherently to all pool members; 7. type and extent of inspection of accounts(e.g. in case of cash in advance; date of inspection) 8. provisions regarding adjustments if circumstances change 9. contractual term 10. provisions regarding the termination of the agreement as well as, if necessary, the prerequisites and consequences of the entrance of new pool members and the early withdrawal of existing pool members 11. agreements on the access to the documents and records regarding the expenses and the service of the service pro 12. allocation of the usage rights stemming from central pool activities in case of research and 5.1.2. Documentation of expenses and services The services received by the pool members and the expenses associated with them must be verifiably documented. This applies in particular if different services are combined in a uniform cost sharing e arrangement. If indirect costs are allocated the basis for the allocation is to be documented. Incor earned in association with the cost sharing arrangement must be recorded separately 5.1.3. Documentation of the expected benefit The determination of the expected benefit is of particular importance. The expected benefit can I illustrated by problem analysis, project reports, target descriptions and similar documents. The documents ust also indicate to which extent other group members might gain a benefit from the cost sharing 5.1. 4. Documentation of service recipient The documentation of the service recipient must contain 1. The cost sharing agreement including appendices, enclosures and supplements 2. if not already part of the contract or contained in the contractual appendices: documentation to justify the allocated costs in particular with regard to the expected services, the expected benefit, the allocation key and the allocation criteria(extent of the benefit in comparison to other service recipients causative and use-oriented cost allocation) 3. agreements on advance payments 4. annual settlement of the expenses actually incurred: itemization of the total expenses in respect of cost centers and their allocation to the pool members; classification of the direct and indirect expenses according to cost types, e.g. labor costs, travel costs, office rent, depreciation for wear and tear, third party licenses, EDP costs, storage expenses; proof of payment; 5. documentation of services actually received and benefit gained, e.g. monthly, quarterly or annual ports on individual services and projects of the service provider, correspondence, visitors' reports minutes of meetings regarding individual projects; research reports, list of patent applications, press pleases, start of production of new products, improvements or innovations in the production of old 5.2. Evidence Principally, the cost sharing agreement can only be taken as a basis for the allocation of the taxable income if the documentation requirements are met. According to the provision of sec. 90 subs. 2 General Tax Code the tax authority is allowed to request information, documents and evidence as necessary in the dividual case. Therefore, the service recipient must immediately submit the documents of the service provider on request of the tax authority 6. Deficiencies in the cost sharing agreement If the cost sharing agreement contains serious deficiencies, such that a prudent and diligent manager would not have participated in such an agreement, the deduction of business expenses will be refused. If a prudent and diligent manager would have participated only with a smaller payment, the deduction of Page 6Tax Management Transfer Pricing Report-Revised German Cost Sharing Arrangement Regulations