background image
12.4.2. Specific TP Issues

The arm’s length range

A related party transaction will generally be deemed to be at arm’s length if the result falls either (a) within the entire range where a CUP method without adjustments is used; or (b) within the interquartile range where other methods are used.  


Cost sharing and cost contribution arrangements may be accepted if well documented and there is a tangible expected benefit for the Israeli party.

Cost of stock option plans

The tax authorities are generally of the opinion that the costs of stock option plans recharged to the Israeli party are not deductible.