An Examination of the Inclusion of Stock-Based Compensation in Cost Contribution Arrangements and Cost Sharing Agreements through OECD Principles and Guidelines, National Law, Case Law and Practical Implications

Stock-based compensation is a widely used method in multinationals to complete the pay package of employees. However, MNEs often omit it in the calculation of their cost base when drafting their cost contribution arrangements (CCAs) or cost sharing agreements (CSAs). In this article, the author discusses the relevance of including this form of compensation when completing CCA and CSA calculations. It is concluded that, globally, the OECD and tax administrations seem to be converging towards a consensus that this type of compensation should, in the vast majority of cases, be considered. The question is raised as to why this analysis only pertains to stock-based compensation, whereas the total compensation model would be more in line with the objectives of the OECD in achieving arm’s length compensation in CCAs and CSAs.