Israel: District Court makes a decision on Israeli transfer pricing rules

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A decision was made and governed by an Israeli District Court that when an Israeli company gained IP ownership and shortly thereafter its employees and other assets (with IP) to a related party, the transfer should be counted as a sale for whole business doing. Also, in that case, IP value was also well-defined and it was resulting from the share acquisition (from Israeli companies) price for tax purposes.

For the first time, the court ruling notices that this type of transaction occurs in acquisitions of Israeli companies where the employees and assets (including IP) are shifted as well as it creates a capital gain. The Court also give its explanation regarding transfer pricing principles, which notifies the way of describing the essence, the chance of assets being transferred and the way of selecting the price of those assets.

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