U.S. Taxation Of The Value Of Executive Services Performed For Multinational Joint Ventures

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Martin A. Goldberg
Robert E. Wnek
Jacqueline S. Pineau


Tax, Multinational, Executive Services, Joint Ventures


Domestic U. S. businesses forming a joint venture with a commonly-controlled foreign affiliates need always to take into account transfer pricing rules, whereby any income, deductions, or credits or one may be reallocated from one of the businesses to the other. This problem provides special concerns with regards to compensation for executive services, where calculation of an arm’s length amount is more difficult, and where other contractual rights may have an impact on the determination of the arm’s length amount. The concept of transfer pricing rules with regard to services was first addressed in 1968 regulations, after which there were temporary regulations in 2003 that were finalized in 2009. However, there are still many issues that have not been addressed, that will need to be resolved in a future set of regulations.


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