Exit fee

Exit fee (also known as an exit payment, compensation payment or exit charge) is a cash paid in exchange for discontinuation of certain economic activities within corporate groups, required in many tax jurisdictions by transfer pricing regulations. It is also referred to as compensation for the "transfer of the place of business", remuneration for taking over functions, assets, risks and contracts with customers, payment for the take-over of part of the business, remuneration for the transfer of production and sales capabilities or transfer of profit potential.^[1][2] The obligation to pay the exit fee corresponds to the responsibility of the other party to cease a certain type of economic activity and it is often linked to other types of benefits, such as the transfer of ownership of production machines or the transfer of industrial property rights or know-how. However, the fee for these assets is usually calculated separately, so in reality it is a remuneration for the transfer of functions or risks excluding assets.^[2][1]

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