Joint ventures and tax

A joint venture (JV) is a commercial arrangement entered into by two or more independent parties (referred to throughout as joint venture parties) in order to do something specific, eg to develop and market a new product, where the two (or more) parties can achieve their aim better together than separately, eg one has the research and development expertise and the other has the manufacturing expertise.

There are no specific laws, including tax laws, applicable to joint ventures and there is no technical legal meaning of the term.

The parties have a choice whether to establish their joint venture as:

•
a contractual joint venture
•
a joint venture partnership, or
•
a joint venture company

The tax issues that arise in establishing, operating and terminating such a joint venture will have an impact on the choice between these types of vehicles, for which see Practice Note: Tax influences on choice of joint venture vehicle. Commercial issues will also be very important, for which see: Joint ventures for construction lawyers—overview.

This topic is concerned only with joint ventures formed between corporate entities

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