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Israel Supreme Court Holds Service Cost Base Must Include Stock Options for Transfer Pricing Purposes

|Approved Changes|Israel
Israel

A decision of the Supreme Court of Israel was issued on 22 April 2018 concerning whether stock-based compensation (stock options) must be included in the cost base for intragroup research and development services, even in cases where the stock options are not a deductible expense.

The decision covers two separate cases involving multinational tech companies that applied a cost-plus approach in determining the appropriate pricing for R&D services performed by their Israeli subsidiaries. A…

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