½Û×ÓÊÓƵ

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 payment.

The OECD Guidelines state that in order for a cost sharing agreement to satisfy the arm's length principle, a participant's