armlengdes

Armlengdes is a term used in some Scandinavian languages to refer to the arm's-length concept. It is commonly encountered in discussions of business transactions, law, and taxation, where the phrase denotes the distance or independence between contracting parties that ensures neutrality and fairness.

Etymology and usage: The expression originates from the literal distance of an arm and is used metaphorically to describe a lack of influence, pressure, or related-party favoritism in negotiations. In Norwegian and Danish, forms related to armlengde or armlengdes appear in phrases describing prices, terms, or arrangements that would be identical to those between unrelated parties.

Arm's length principle: The central idea associated with armlengdes is the arm's-length principle, widely applied in transfer pricing, tax law, and regulatory contexts. Under this principle, related parties should set terms as if they were independent, with prices and conditions that reflect market conditions. The aim is to prevent shifting profits or burdens to achieve tax advantages or other favorable outcomes.

Implementation and scope: The principle is formalized in international guidance, notably the OECD Transfer Pricing Guidelines, and is adopted in varying degrees by national tax authorities. Practitioners use comparables, benchmarking, and documentation to demonstrate compliance. Critiques focus on the availability of reliable comparables, the complexity of multinational structures, and the administrative burden for businesses.

See also: Arm's length transaction, Transfer pricing, OECD Transfer Pricing Guidelines, Related-party transactions, Tax law.