Migration of Intellectual Property from Israeli Technology Companies
In this article, we highlight the strength of the Israeli technology market and the upswing of foreign investment in Israel in various forms (e.g. acquisitions, establishment of subsidiaries). We review the Israeli tax incentives in maintaining intellectual property within Israel as well as both OECD and Israeli principles of Business Restructuring, addressing the various resulting […]
Israeli Tax Authorities Publish New Transfer Pricing Circulars
Today, September 5, 2018, the Israeli Tax Authorities (“ITA”) published two new circulars regarding Transfer Pricing (“TP”). Circular 11/2018 The first circular is entitled “Circular 11/2018: Determination of the Appropriate TP Method for Activities Related to Distribution, Marketing and Sales of a Multinational Group within the Local [Israeli] Market”. The purpose of this circular […]
Stock-based Compensation and the Arm’s Length Principle An edited version of this article is found in the International Transfer Pricing Journal
Introduction Inclusion or deduction of stock-based compensation (“SBC”)[1], to be defined herein, in a cost base when applying the Transactional Net Margin Method (“TNMM”)[2] / Comparable Profits Method (“CPM”)[3] has been an ongoing transfer pricing (“TP”) discussion in recent years. As will be detailed in this article, several countries have attempted to publish legislation to […]
Supreme Court Upholds that Stock-based Compensation is Included in Cost Base
On April 22, 2018, the Israeli Supreme Court ruled on appeals brought by Kontera Technologies Ltd. and Finisar Israel Ltd. and counter-appeals by the respective Assessing Officers with regards to the inclusion of stock-based compensation in the cost base for cost plus arrangements. The ruling also addressed relevancy of deductibility, transfer pricing (“TP”) adjustments and […]