Intercompany Services Agreement — Framework Draft¶
Between: Renfroe Family Holdings, LLC ("RFH") and Renfroe Hospitality Group, S. de R.L. de C.V. (successor to Renfroe Hospitality Group, S.A. de C.V.) ("RHG")
Purpose: Document in writing the collection-agent and ancillary-services relationship that has existed in practice since late 2024 between RFH (the US parent) and RHG (the Mexican operator of Casa Moksha). Pair with a transfer-pricing memo explaining the economic rationale for the chosen fee structure.
Status: FRAMEWORK DRAFT — written to give counsel something to edit rather than draft from scratch. This is not a signed agreement and is not legal advice. To be reviewed and finalized by US cross-border counsel (TBD) + Portilla, Ruy-Díaz & Aguilar (Mexican side) + Pearce Bevill (tax characterization).
Written: 2026-04-20.
How to use this draft¶
- US cross-border counsel edits the US-law framing, governing-law clause, and transfer-pricing posture.
- Portilla, Ruy-Díaz & Aguilar validates Mexican-law effect, particularly related-party transaction reporting under Mexican tax rules and any legal-entity-representation issues given the S.A. de C.V. → S. de R.L. de C.V. conversion.
- Pearce Bevill confirms US tax characterization (§482, transfer pricing documentation, 5471 Schedule M impact).
- The two alternative fee-structure options (Section 5) require a joint decision among counsel/CPA and Austin.
- The retroactivity treatment (Section 9) requires explicit attention — existing conduct dates to Oct 2024 and must be addressed.
The draft preserves the operational reality: RFH holds USD guest revenue on RHG's behalf; remits via periodic wires; pays incidental Mexican-side expenses on RHG's behalf; takes no compensation (or a nominal one). It's written to match that reality, not to invent structure.
1. Recitals / background¶
Draft text:
WHEREAS, RHG is a Mexican sociedad (currently S.A. de C.V., converting to S. de R.L. de C.V. in 2026) that operates the Casa Moksha boutique hotel located in Tulum, Quintana Roo, Mexico;
WHEREAS, RHG's guest revenue is received through multiple channels, some of which settle in United States dollars through US-domiciled financial intermediaries (Brex Inc., PayPal, Coinbase, and certain historical personal accounts);
WHEREAS, RFH is a Texas limited liability company that maintains US-domiciled banking relationships (JPMorgan Chase, N.A.; Brex Inc.) suitable for receiving and holding such US-dollar guest revenue;
WHEREAS, since approximately October 2024, RFH has in practice received and held RHG's USD-denominated guest revenue, remitting net amounts to RHG's Mexican banking relationships on a periodic basis, and from time to time paid Mexican-side third-party vendors on RHG's behalf; and
WHEREAS, the parties now desire to memorialize this arrangement in writing, confirming that RFH acts as an agent of RHG for the limited purpose described herein, that guest revenue received by RFH is and at all times has been the revenue of RHG, and that RFH holds such revenue as a fiduciary until remitted;
NOW, THEREFORE, the parties agree as follows.
Counsel notes: - Verify RHG's post-conversion name and legal form for final execution version. - Consider adding a recital about Austin Renfroe being the sole beneficial owner of both parties (relevant to related-party framing). - Consider adding a recital referencing the prior informal arrangement for the period Oct 2024 through the execution date (ties to Section 9 retroactivity).
2. Definitions¶
Draft text:
For purposes of this Agreement:
2.1 "Casa Moksha Revenue" means all amounts received by RFH from third parties (including without limitation online booking platforms, guests, retreat operators, and payment processors) in respect of lodging, hospitality services, events, or retreats at the Casa Moksha property or otherwise arising from RHG's business operations.
2.2 "Designated Collection Accounts" means those financial accounts maintained by RFH into which Casa Moksha Revenue is received, listed on Schedule A (which the parties may update by written notice). As of the Effective Date, Schedule A includes: Brex Inc. account ending 3529 ("Casa Moksha: Dep"); PayPal account in RHG's or RFH's name associated with Casa Moksha; Coinbase account ending [to be specified] associated with Casa Moksha.
2.3 "RHG Mexican Accounts" means those accounts maintained by RHG at Banco Santander (México), S.A. and any successor or additional Mexican financial institutions used for RHG's operations, listed on Schedule B.
2.4 "Ancillary Payments" means third-party payments made by RFH to Mexican-domiciled or US-domiciled vendors for goods or services consumed in or by RHG's business operations, where payment is made from RFH's own accounts as a matter of operational convenience.
2.5 "Settlement" means a transfer of funds from a Designated Collection Account (or RFH's general accounts) to an RHG Mexican Account, clearing all or part of the running intercompany balance established under Section 4.
2.6 "Effective Date" means [DATE — proposed: a date that matches the operational start of the relationship, subject to Section 9 retroactivity treatment].
Counsel notes: - Schedule A should include account nicknames, last-four digits, and institution names — not full account numbers (which should be referenced but not printed in the body for security). - Consider adding definitions for "Arm's-Length Standard" if Option B fee structure (Section 5) is adopted.
3. Appointment as collection agent¶
Draft text:
3.1 Appointment. RHG hereby appoints RFH as its non-exclusive agent for the limited purpose of receiving, holding, and remitting Casa Moksha Revenue, and RFH accepts such appointment on the terms set forth in this Agreement.
3.2 Scope limited. RFH's agency is limited to the activities described in this Section 3, Section 4, and Section 6. RFH has no authority to bind RHG in any transaction outside the scope of Casa Moksha Revenue collection and Ancillary Payments, except as specifically authorized in writing by RHG.
3.3 Title to funds. All Casa Moksha Revenue received by RFH is and at all times shall be the property of RHG. RFH holds such funds as agent for RHG and not for RFH's own account. RFH is not a beneficial owner of Casa Moksha Revenue.
3.4 Segregation. RFH shall make commercially reasonable efforts to segregate Casa Moksha Revenue in the Designated Collection Accounts. Commingling with RFH's other funds in the ordinary course of banking operations (e.g., through Brex's cash management sweeps) does not alter title under Section 3.3; RFH's accounting records shall at all times reflect the amount of Casa Moksha Revenue held.
3.5 No guarantee. RFH provides no guarantee of collection of Casa Moksha Revenue. RFH's obligation is limited to using commercially reasonable efforts to receive funds from third parties pursuing RHG's business.
Counsel notes: - §3.3 is the key legal framing. It establishes that guest revenue is always RHG's, not RFH's. US and Mexican taxing authorities key off this characterization. - Consider whether segregation language should be stronger given the commingling-in-practice. Possible upgrade: "RFH shall maintain a separate sub-ledger within its accounting system identifying Casa Moksha Revenue at all times, whether or not physically segregated into the Designated Collection Accounts." - Agency framing (rather than service-provider framing) is the cleaner US-tax characterization for the revenue itself — but creates Mexican withholding-tax questions for any service fee. See Section 5.
4. Intercompany balance and settlement¶
Draft text:
4.1 Running account. The parties shall maintain a running intercompany balance reflecting (a) Casa Moksha Revenue received by RFH, less (b) Settlements made by RFH to RHG Mexican Accounts, less © Ancillary Payments made by RFH on RHG's behalf, less (d) any service fee accrued under Section 5 (if applicable).
4.2 Positive balance. Where the net of (a)–(d) is positive, RFH holds such balance as a payable to RHG.
4.3 Negative balance (pre-funding). The parties acknowledge that from time to time Settlement amounts may exceed the then-current balance under Section 4.1, resulting in a temporary pre-funding of RHG's Mexican-side operations. Such pre-funding shall be treated as a short-term advance from RFH to RHG, to be offset by subsequent Casa Moksha Revenue accruals, and shall not be characterized as a capital contribution by RFH to RHG. The parties agree that such pre-funding is commercially reasonable in the context of currency conversion, Mexican-side operating cash-flow management, and the parties' agency relationship, and does not bear interest provided that the pre-funding period does not exceed [90 / 180] days. [OPEN ITEM FOR COUNSEL: right window length.]
4.4 Settlement cadence. RFH shall make Settlements to RHG at a commercially reasonable cadence, targeting no less than monthly under ordinary circumstances. The parties may agree on different cadences for particular periods (e.g., larger pre-funding Settlements ahead of known expense periods).
4.5 Method. Settlements are typically made by US-to-Mexico wire transfer initiated from RFH's JPMorgan Chase account to the applicable RHG Mexican Account. RFH bears ordinary wire fees as an operational cost; FX spread between USD sent and MXN received accrues to RHG's account and is recorded in RHG's books as foreign-exchange gain or loss.
4.6 Reconciliation. On a quarterly basis, RFH and RHG (or their respective accountants) shall confirm the running balance in writing. Any discrepancies shall be reconciled within thirty (30) days.
4.7 Year-end settlement. The parties shall target a reconciliation and substantial-settlement of the running balance as of December 31 of each calendar year. Balances at year-end should reflect economic reality (modest amounts consistent with timing of ordinary settlements), not large accumulated payables.
Counsel notes:
- §4.3 is the key transfer-pricing question. A negative balance is economically a short-term loan from RFH to RHG; pricing it at zero interest requires a transfer-pricing memo justifying the de minimis amount/duration.
- Alternative to §4.3: treat pre-funding above a threshold (say $50K or 90 days) as a separate documented intercompany loan at AFR. More conservative; adds mechanics.
- §4.6 quarterly reconciliation mirrors the recommendation in accounting/advisory-best-practices.md §7.
- §4.7 year-end settlement target helps avoid appearance of deemed distribution or accumulated-deficit issues on 5471.
5. Fee structure — TWO ALTERNATIVE OPTIONS¶
The parties must adopt ONE of the following two options. Counsel + Pearce recommend picking based on transfer-pricing posture and administrative burden. Option A is simpler; Option B is more defensible at scale but adds accounting overhead.
OPTION A — No fee, with transfer-pricing memo¶
Draft text:
5A.1 No service fee. RFH provides the services described in this Agreement (collection, holding, remittance, and Ancillary Payments) at no charge to RHG.
5A.2 Arm's-length rationale. The parties acknowledge that, given (i) the de minimis nature of the service activity relative to RHG's operations; (ii) the parties' common beneficial ownership and integrated US-Mexico operating posture; (iii) the absence of any readily-available independent market provider offering this specific combination of services; and (iv) the fact that any arm's-length fee would be substantially offset by the corresponding deduction at RHG, the parties agree that no arm's-length fee is required. The parties shall maintain a transfer-pricing memorandum supporting this conclusion in accordance with applicable US and Mexican law.
5A.3 Cost pass-through. Notwithstanding Section 5A.1, RFH may charge RHG direct third-party costs incurred specifically in connection with the services (e.g., international wire transfer fees identifiable as RHG-related). Such charges shall be billed at actual cost without markup and shall be reflected in the running balance under Section 4.1.
When Option A is appropriate: - Transaction volume remains modest (currently ~$137K USD over 18 months ≈ ~$91K/year annualized). - No evidence of substantial RFH-side direct costs (staff time, dedicated infrastructure). - Pearce + Mexican counsel agree de minimis analysis holds.
OPTION B — Arm's-length service fee¶
Draft text:
5B.1 Service fee. In consideration for the services provided under this Agreement, RHG shall pay RFH a service fee equal to [cost plus 5% / cost plus 7% / other] of RFH's allocable costs of providing the services, computed as set forth on Schedule C.
5B.2 Invoicing. RFH shall invoice RHG quarterly for the service fee accrued for the quarter. Invoices shall be issued within thirty (30) days of quarter-end.
5B.3 Payment. Service fees may be satisfied by debit against the running balance under Section 4.1, or by separate payment, at the parties' option.
5B.4 Arm's-length support. The cost-plus methodology selected under Section 5B.1 shall be supported by a transfer-pricing study performed by a qualified professional at reasonable intervals (at least every three years).
5B.5 Mexican withholding. The parties acknowledge that service fees paid by RHG to RFH may be subject to Mexican withholding tax at the rate applicable under Mexican law and, if applicable, the US-Mexico tax treaty. RFH shall provide RHG with the documentation necessary to claim any applicable treaty benefits. RHG shall provide RFH with a withholding-tax receipt for each payment.
When Option B is appropriate: - Service activity is material and defensibly priceable (e.g., RFH has identifiable staff hours, dedicated infrastructure, foreign-exchange hedging services). - There is a strategic desire to flow income to RFH (e.g., to absorb US-side losses or interact with NOL). - Pearce + Mexican counsel agree that cost-plus is defensible given the functions.
Comparison of options¶
| Dimension | Option A (no fee) | Option B (arm's-length fee) |
|---|---|---|
| Administrative burden | Low — just a memo | Moderate — invoicing + tracking |
| Transfer-pricing documentation | One-time memo | Periodic study required |
| Mexican withholding exposure | None | 10%–25% depending on treaty + service nature |
| US income implication | Zero direct | Fee income on RFH (stacks against NOL if any) |
| RHG deduction | Zero (no expense) | Fee deductible in Mexico (reduces ISR) |
| Audit optic | Defensible if memo is robust | Defensible with transfer-pricing study |
| Aggressiveness | Moderate (acceptable for de minimis) | Conservative |
| Austin's preferred frame (2026-04-19 decisions) | Tentative lean — pending counsel | — |
Recommendation for counsel discussion: Start with Option A + a rigorous transfer-pricing memo. Revisit in 2027 if transaction volume grows materially or if an IRS or SAT examination takes a contrary view.
6. Ancillary payments¶
Draft text:
6.1 Authorization. From time to time, RFH may pay third parties (Mexican or US-domiciled) for goods or services consumed in or by RHG's business operations. Such Ancillary Payments are authorized where: (a) RHG's designated representative has given prior written or electronic approval, or (b) The payment is consistent with the parties' course of dealing for similar vendors, or © The amount does not exceed $[5,000 USD / MXN equivalent] per transaction.
6.2 Documentation. For each Ancillary Payment, RFH shall retain the invoice or other supporting document and shall attach it to its accounting record of the payment. Mexican-domiciled vendors shall be requested to issue CFDI (Mexican tax invoice) in RHG's name where possible, to enable RHG's IVA recovery.
6.3 Effect on running balance. Each Ancillary Payment reduces the Due-to-RHG balance in RFH's books (or increases the Due-from-RHG balance if the running balance is currently negative) by the USD-equivalent amount of the payment.
6.4 RHG direct vendor payments. Nothing in this Section 6 limits RHG's ability to pay any Mexican-domiciled vendor directly from its Mexican accounts without RFH's involvement.
Counsel notes:
- §6.1© threshold should be set by Austin. $5K is a reasonable ceiling; could be lower or higher.
- §6.2 CFDI language is important for IVA recovery (see tax/advisory-tax-benefit-areas.md §C5).
7. Books, records, and accounting¶
Draft text:
7.1 RFH records. RFH shall maintain books and records in accordance with US generally accepted accounting principles or Xero default conventions reflecting: (a) All Casa Moksha Revenue received, by source and date; (b) All Settlements made, by date and amount (USD sent, MXN received); © All Ancillary Payments, with supporting documentation; (d) The running intercompany balance as of each month-end; (e) Any service fees accrued (under Option B).
7.2 RHG records. RHG shall maintain books and records in accordance with applicable Mexican accounting standards reflecting the same flows from RHG's perspective.
7.3 Reconciliation. As set forth in Section 4.6.
7.4 Retention. Both parties shall retain books, records, and supporting documents for the period required by applicable US and Mexican tax law (generally seven years from the return-filing date, longer in certain circumstances).
7.5 Access. Each party shall have access to the other's records relevant to the intercompany account, subject to reasonable confidentiality.
8. Representations¶
Draft text:
Each party represents and warrants to the other that: (a) It is duly organized and validly existing under the laws of its jurisdiction of formation; (b) It has full power and authority to enter into and perform this Agreement; © The execution, delivery, and performance of this Agreement have been duly authorized; and (d) This Agreement is a valid and binding obligation of such party.
9. Retroactive treatment — OPEN ITEM¶
Problem: the parties' actual conduct began in October 2024. This Agreement is being executed in 2026. Three options exist for the intervening period:
Option 1 — Backdated execution ("as of" Oct 18, 2024)¶
Straightforward language: "This Agreement is made and entered into as of October 18, 2024, though executed on [execution date], and shall govern all conduct between the parties from the as-of date forward."
Risks: - US tax authorities sometimes scrutinize backdated intercompany agreements as "ghost-writing history." A clean paper trail of the actual 2024–2026 conduct matching the Agreement's terms mitigates this. - Mexican authorities similarly skeptical — Portilla input needed.
Option 2 — Forward-only execution with ratification of prior conduct¶
"This Agreement governs the parties' relationship from the Execution Date forward. The parties acknowledge that similar practices have informally obtained between them since October 2024, and ratify such prior practices as consistent with the economic framing set forth in this Agreement."
Risks: - Leaves the 2024–2025 period unpapered in any enforceable sense. - Requires a separate transfer-pricing memo covering the prior period.
Option 3 — Separate instrument for retroactive period + forward agreement¶
Execute two documents: a one-page "Acknowledgment of Prior Conduct" dated as of today but describing 2024–current conduct, plus this forward-looking Agreement going forward.
Risks: - Most complex. - Cleanest on the "no backdating" front.
Recommendation for counsel: discuss with Pearce Bevill + Portilla. Most likely outcome is Option 2 with a robust transfer-pricing memo covering the 2024–2026 conduct. If US-side exposure is material (IRS could challenge the collection-agent framing for 2024), Option 1 with extensive supporting evidence may be better.
10. Term and termination¶
Draft text:
10.1 Term. This Agreement commences on the Effective Date (or as-of date under Section 9) and continues until terminated under Section 10.2.
10.2 Termination. Either party may terminate this Agreement upon ninety (90) days' prior written notice to the other party. Upon termination: (a) Casa Moksha Revenue received after the termination date shall be remitted to RHG by RFH within ten (10) business days of receipt; (b) The parties shall complete a final reconciliation and settlement of the running balance within thirty (30) days of termination; © Provisions relating to indemnity, confidentiality, and records retention shall survive termination.
10.3 Entity-conversion continuity. The parties acknowledge that RHG is converting from S.A. de C.V. to S. de R.L. de C.V. during the Term. Such conversion shall not constitute a termination or novation of this Agreement; the Agreement shall continue in effect with the post-conversion entity as the successor RHG. The parties shall execute any documents reasonably necessary to evidence such continuity.
Counsel notes: - §10.3 is critical given the 2026 conversion. Portilla should sign off on the continuity language.
11. Miscellaneous¶
Draft text:
11.1 Governing law. This Agreement shall be governed by the laws of [Texas / Mexico (Quintana Roo) / State of Delaware]. OPEN ITEM: Texas is natural for RFH; Mexican law may be appropriate if enforcement ever involves RHG assets.
11.2 Dispute resolution. Any dispute arising under this Agreement shall be resolved by [binding arbitration administered by ICDR or AAA] in [Austin, Texas / Mexico City]. OPEN ITEM: arbitration seat matters.
11.3 Notices. All notices shall be in writing and sent to the addresses set forth on the signature page, or to such other address as a party may specify by notice.
11.4 Entire agreement. This Agreement constitutes the entire agreement between the parties regarding its subject matter and supersedes all prior oral or written understandings.
11.5 Amendment. This Agreement may only be amended by a written instrument signed by both parties.
11.6 No third-party beneficiaries. Except as explicitly provided, this Agreement is solely for the benefit of the parties.
11.7 Assignment. Neither party may assign this Agreement without the prior written consent of the other.
11.8 Severability. If any provision is held unenforceable, the remainder shall continue in effect.
11.9 Counterparts. This Agreement may be executed in counterparts, including by electronic signature.
12. Signatures¶
By [Austin Renfroe as Manager/Sole Member], Renfroe Family Holdings, LLC
By [Austin Renfroe as Administrator Único / Member Representative], Renfroe Hospitality Group, S. de R.L. de C.V.
Schedules (to be completed at execution)¶
- Schedule A — Designated Collection Accounts
- Schedule B — RHG Mexican Accounts
- Schedule C — Fee Calculation Methodology (Option B only)
Counsel action checklist¶
To convert this framework into a signed agreement, each of the following must happen:
US cross-border counsel (TBD): - [ ] Select Option A vs. Option B (fee structure) with transfer-pricing rationale - [ ] Decide retroactivity treatment (Section 9 option 1, 2, or 3) - [ ] Governing law + dispute resolution selection - [ ] Section 4.3 pre-funding safe-harbor window (90 / 180 / other days) - [ ] Section 6.1© Ancillary Payment threshold - [ ] Draft transfer-pricing memo paired with Option A (or study paired with Option B)
Portilla, Ruy-Díaz & Aguilar: - [ ] Mexican-law validation of collection-agent framing (agency vs. mandate) - [ ] Withholding-tax analysis (Option B — likely 10%-25% depending on service characterization) - [ ] RHG authority to enter post-conversion (S. de R.L. de C.V. requirements) - [ ] Mexican related-party transaction reporting under SAT rules (relevant to ISR) - [ ] Consistency with RHG's corporate governance (administrador único authority)
Pearce Bevill: - [ ] US tax characterization sign-off on collection-agent agency (vs. revenue-recognition at RFH) - [ ] §482 transfer-pricing posture review (both options) - [ ] 5471 Schedule M implications — how transactions report after the Agreement is in place - [ ] Interaction with check-the-box status (if RHG is disregarded, agreement still matters for Mexican tax but not US tax at the RHG-level) - [ ] Retroactivity-treatment sign-off
Austin: - [ ] Final decision on Option A vs. Option B - [ ] Schedule A + B completeness (are all accounts listed?) - [ ] Authority-to-sign confirmation for both entities - [ ] Acceptance of pre-funding safe-harbor window
Related files¶
legal/advisory-contract-gaps.md§1 — the gap this draft addressesaccounting/casa-moksha-intercompany-mockup.md— the mechanics this Agreement papersaccounting/casa-moksha-integration-plan.mdStep 3 — where this draft lands in the integration sequenceaccounting/chart-of-accounts.md— the account structure the Agreement referencestax/2025-filing-prep.mdQ11 — Pearce's parallel itemcontext/entities.md— RFH and RHG entity details
Companion document: legal/rfh-gk-treasury-framework-draft.md — parallel framework for the RFH ↔ Renfroe Holdings GK (Japan) relationship, which is a different fact pattern (treasury / capital-contribution, not collection-agent).