Commentary

B4.148 Transfer pricing and cost contribution arrangements

Business tax
Business tax | Commentary

B4.148 Transfer pricing and cost contribution arrangements

Business tax | Commentary

B4.148 Transfer pricing and cost contribution arrangements

It has become more common for affiliated companies to enter into cost sharing arrangements as an alternative to more traditional licensing arrangements. The OECD Guidelines refer to these as cost contribution arrangements (CCAs)1. Another term that may be encountered is a qualifying cost sharing agreement, which is a more narrowly-defined concept in the US transfer pricing regulations.

Under a CCA two or more international affiliates share the contributions and risks involved in the joint development, production or the obtaining of intangibles, tangibles or services with the understanding that such intangibles, tangible assets or services are expected to create benefits for the individual businesses of each of the participants2. Participants in a CCA would agree to share the contributions to the arrangements in proportion to the benefits each expects to receive. Any resulting interests, rights or entitlements which arise from the CCA can be exploited separately by the individual entities without further

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial