Sales Tax Implications of Intercompany Fees

Navigating the complexities of sales tax is critical for businesses, especially when intercompany fees are involved. These fees, charged between two legal entities—usually by a foreign or domestic parent or management company—for providing administrative, financial, and operational services to its U.S. subsidiaries or affiliates, can trigger various sales tax implications, especially when they involve the sharing, transferring, or leasing of tangible personal property, including software and technology, or the sharing of employees when the subsidiary supervises and directs performance. They can be categorized in various ways, including as intercompany management fees, administrative fees, technology fees, or support fees.