Taxes clause: Copy, customize, and use instantly
Introduction
A taxes clause explains who is responsible for paying taxes under a contract. It provides clear rules to prevent confusion, disputes, or surprise tax bills. This type of clause is especially useful in cross-border deals or agreements involving activities where taxes can be complex.
Below, you'll find templates for different types of taxes clauses. Choose the one that fits your needs, tailor it to your contract, and include it in your agreement.
Neutral taxes clause
This clause splits tax responsibilities fairly between the parties.
Each party will be responsible for all taxes imposed on its income, business operations, and assets. Any sales, use, value-added, or similar taxes arising from this agreement will be borne equally by the parties unless otherwise specified.
Buyer-responsible taxes clause
This clause makes the buyer solely responsible for transaction-related taxes.
All applicable taxes, including but not limited to sales, use, or value-added taxes, arising from the purchase of goods or services under this agreement will be the sole responsibility of the buyer.
Seller-responsible taxes clause
This clause assigns all tax obligations to the seller.
The seller will be solely responsible for all applicable taxes, including income, sales, and value-added taxes, arising from the sale of goods or services under this agreement.
Withholding taxes clause
This clause specifies how withholding taxes will be handled.
Any taxes required to be withheld under applicable law will be deducted from payments made under this agreement. The paying party will provide documentation of such withholding to the receiving party upon request.
Cross-border taxes clause
This clause addresses tax responsibilities for international transactions.
Each party will be responsible for any taxes imposed within its jurisdiction. For cross-border transactions, the buyer will bear all import duties, VAT, and other similar taxes, unless explicitly agreed otherwise in writing.
Tax gross-up clause
This clause ensures one party is compensated if taxes reduce their payment.
If any payment under this agreement is subject to tax withholding, the paying party will gross up the payment to ensure that the receiving party receives the full amount specified in the agreement.
Indemnity for taxes clause
This clause provides indemnity for tax liabilities.
Each party agrees to indemnify and hold the other party harmless from any tax liabilities, penalties, or interest resulting from its failure to fulfill tax obligations under this agreement.
VAT-exclusive taxes clause
This clause specifies that taxes like VAT are excluded from prices.
All prices specified in this agreement are exclusive of VAT or similar taxes. Such taxes will be added to the invoice and borne by the buyer.
Tax filing responsibility clause
This clause clarifies which party is responsible for tax filings.
Each party is responsible for filing and paying its own taxes as required under applicable law. Neither party will be responsible for the other’s tax filings or obligations arising from this agreement.
Transfer taxes clause
This clause assigns responsibility for taxes on the transfer of assets.
Any transfer taxes, duties, or fees arising from the transfer of assets under this agreement will be borne by [insert party, e.g., “the buyer” or “the seller”].
Transaction-specific taxes clause
This clause addresses taxes specific to the type of transaction.
All taxes arising directly from the transactions contemplated by this agreement, including but not limited to sales and use taxes, will be borne by [insert party].
Local jurisdiction taxes clause
This clause ensures compliance with local tax laws.
Each party will comply with all applicable tax laws in its respective jurisdiction. Any penalties or liabilities arising from non-compliance will be the sole responsibility of the non-compliant party.
Shared tax responsibility clause
This clause equally divides tax liabilities between the parties.
Any taxes arising under this agreement will be shared equally by the parties, unless otherwise specified in writing. Each party agrees to cooperate in good faith to minimize tax liabilities where legally permissible.
Tax exemption clause
This clause allows one party to claim an exemption from certain taxes.
If either party is eligible for a tax exemption, the exempt party must provide proper documentation to the other party. Until such documentation is provided, applicable taxes will be charged and payable.
Prepaid taxes clause
This clause ensures taxes are paid upfront.
Any taxes arising from this agreement must be prepaid by [insert party, e.g., “the buyer”]. Failure to prepay taxes will result in a delay in the delivery of goods or services under this agreement.
Tax dispute resolution clause
This clause addresses how tax-related disputes will be resolved.
Any disputes regarding tax liabilities under this agreement will be resolved through good-faith negotiations. If the parties cannot resolve the dispute, it will be submitted to arbitration in accordance with [insert arbitration rules].
Audit-triggered taxes clause
This clause clarifies responsibility for tax adjustments resulting from audits.
If a tax audit results in additional liabilities, the party responsible for the underpayment will bear the full cost of the taxes, penalties, and interest. Documentation of the audit findings must be provided to the other party.
Tax avoidance clause
This clause ensures compliance with anti-tax avoidance laws.
Neither party will engage in practices intended to unlawfully evade or minimize taxes under this agreement. Any liabilities arising from such actions will be borne solely by the offending party.
Tax-sharing clause
This clause divides tax obligations equally between the parties.
All taxes arising from this agreement, including but not limited to sales, use, and value-added taxes, will be shared equally by both parties, unless otherwise specified in writing.
Retrospective taxes clause
This clause addresses tax liabilities that arise after the agreement is signed.
Any taxes assessed retroactively by a tax authority related to transactions under this agreement will be borne by the party responsible for triggering the assessment, unless otherwise agreed in writing.
Tax indemnity clause
This clause ensures one party compensates the other for tax-related liabilities.
[Party A] agrees to indemnify and hold [Party B] harmless against any taxes, penalties, or interest assessed by a tax authority that result from [Party A]’s failure to comply with applicable tax laws.
Reimbursement for taxes clause
This clause requires one party to reimburse the other for tax payments made on their behalf.
If [Party A] is required to pay taxes on behalf of [Party B] under this agreement, [Party B] agrees to reimburse [Party A] for the full amount, including any penalties or interest incurred.
Tax neutrality clause
This clause ensures tax changes don’t alter the financial balance of the agreement.
Any changes in applicable tax laws that increase the tax liability of either party under this agreement will result in an equivalent adjustment to the financial terms to ensure the original economic intent is preserved.
Excluded taxes clause
This clause excludes certain taxes from the agreement.
The parties agree that property taxes, franchise taxes, and other similar taxes imposed on the assets or operations of a party will not be shared under this agreement and remain the responsibility of the party to whom they apply.
Pass-through taxes clause
This clause ensures certain taxes are passed through to the end customer.
Any sales, use, or similar taxes arising from transactions under this agreement will be passed through to the end customer and separately itemized on invoices.
Fixed-rate taxes clause
This clause fixes tax rates for the duration of the agreement.
All taxes applicable to this agreement will be calculated at the rates in effect on the effective date. Any changes to tax rates will not alter the amounts payable under this agreement unless mutually agreed in writing.
Tax reporting clause
This clause sets out reporting obligations related to taxes.
Each party agrees to report its respective share of taxes under this agreement to the appropriate tax authorities and to provide proof of such reporting upon request by the other party.
Tax refund clause
This clause addresses how tax refunds will be handled.
Any tax refunds related to transactions under this agreement will be promptly returned to the party that originally paid the tax, unless otherwise agreed in writing.
State-specific taxes clause
This clause applies tax rules specific to a jurisdiction.
For transactions within [insert state], all applicable taxes will be calculated and paid in accordance with [insert state’s] tax laws. Any disputes related to taxes will be resolved under the jurisdiction of [insert state].
Escrowed taxes clause
This clause requires taxes to be held in escrow until payment.
All taxes due under this agreement will be deposited into an escrow account maintained by [insert party or institution]. Taxes will be paid from this account upon the issuance of a final tax invoice.
Annual tax review clause
This clause provides for periodic review of tax arrangements.
The parties agree to conduct an annual review of the tax terms of this agreement. Any adjustments required due to changes in tax laws or business practices will be documented in a written amendment.
Compliance-first taxes clause
This clause prioritizes tax compliance over cost savings.
All tax-related obligations under this agreement must prioritize full compliance with applicable laws and regulations, even if such compliance results in increased costs for either party.
Equalization taxes clause
This clause adjusts financial terms to offset tax burdens.
If one party bears a disproportionate tax burden under this agreement, the parties agree to negotiate a financial adjustment to equalize the net economic impact.
Deferred tax payment clause
This clause allows taxes to be paid at a later date under specific conditions.
Taxes arising under this agreement may be deferred until [insert time period or event], provided such deferral is permitted under applicable law. Both parties agree to cooperate in filing the necessary documentation to enable the deferral.
Environmental tax responsibility clause
This clause addresses taxes specific to environmental regulations.
Any taxes, fees, or levies related to environmental compliance arising from this agreement will be the sole responsibility of [insert party]. This includes, but is not limited to, carbon taxes or waste management levies.
Lump-sum tax clause
This clause sets a single payment for all tax obligations under the agreement.
The parties agree that a lump sum of [insert amount] will cover all applicable taxes related to this agreement. Any excess liability will be borne by the paying party.
Retained tax credits clause
This clause specifies which party benefits from tax credits.
Any tax credits arising from transactions under this agreement will be retained by [insert party], regardless of which party incurs the related tax liability.
Tax dispute clause
This clause provides a mechanism for resolving disputes about tax liabilities.
Any disputes regarding tax obligations under this agreement will first be resolved through good-faith negotiations. If unresolved, the dispute will be submitted to arbitration under the rules of [insert arbitration body].
Anti-tax evasion clause
This clause ensures compliance with anti-tax evasion regulations.
Both parties agree to comply with all applicable anti-tax evasion laws. Any liabilities arising from non-compliance will be the sole responsibility of the offending party.
Pre-approval tax clause
This clause requires one party to approve tax-related costs before they are incurred.
Any taxes arising under this agreement that are expected to exceed [insert amount] must be pre-approved in writing by [insert party]. Unapproved taxes will not be reimbursed.
Operational tax burden clause
This clause allocates taxes based on operational control.
Taxes arising from the operations of either party under this agreement, including property taxes and utility taxes, will be borne by the party exercising operational control over the relevant activities.
Regional tax-sharing clause
This clause divides tax obligations based on geographic location.
Taxes arising from activities within [insert region] will be borne by [insert party]. Taxes arising from activities outside this region will be borne by the other party unless otherwise agreed in writing.
Dual jurisdiction tax clause
This clause addresses tax obligations in contracts involving two jurisdictions.
For transactions occurring across [insert jurisdictions], taxes will be calculated and paid in accordance with the laws of the jurisdiction where the transaction occurs. Any disputes will be resolved under the jurisdiction of [insert primary jurisdiction].
Tax holiday clause
This clause addresses tax benefits during specific timeframes.
If either party qualifies for a tax holiday or exemption during the term of this agreement, the other party will cooperate in ensuring compliance with the terms of the exemption. Taxes not covered by the holiday will remain the responsible party’s obligation.
Retroactive tax adjustments clause
This clause allows adjustments for taxes assessed retroactively.
If a tax authority imposes retroactive adjustments to taxes related to this agreement, the party responsible for the initial filing will bear the liability for such adjustments, including penalties and interest.
Joint tax liability clause
This clause establishes joint responsibility for certain taxes.
The parties agree to share joint liability for [insert type of taxes, e.g., “sales taxes”] arising under this agreement. Both parties will cooperate in filing and paying such taxes.
Tax apportionment clause
This clause divides tax obligations proportionally.
Taxes under this agreement will be apportioned based on the percentage of benefit derived by each party from the relevant transaction. Documentation supporting the apportionment must be retained for audit purposes.
Tax abatement clause
This clause addresses obligations during tax abatements or waivers.
During any period where a tax abatement or waiver applies to transactions under this agreement, the benefiting party agrees to notify the other party of any changes that could affect the abatement. Any taxes outside the scope of the abatement will remain the responsible party’s obligation.
Industry-specific tax exemption clause
This clause addresses tax exemptions unique to certain industries.
If either party qualifies for an industry-specific tax exemption under applicable law, such as agricultural, healthcare, or education-related exemptions, the benefiting party agrees to provide proper documentation to the other party to avoid unnecessary tax liabilities.
Technology licensing tax clause
This clause clarifies tax obligations in technology licensing agreements.
Taxes arising from the licensing of intellectual property under this agreement, including royalties and other related payments, will be borne by the licensee unless otherwise agreed in writing.
Real estate transaction tax clause
This clause addresses taxes specific to real estate contracts.
Any taxes, transfer fees, or duties related to real estate transactions under this agreement will be borne by the purchaser, unless otherwise required by applicable law.
Renewable energy tax clause
This clause allocates taxes related to renewable energy projects.
Taxes, levies, or incentives related to renewable energy operations under this agreement, including carbon credits and renewable energy certificates, will be allocated based on the operational control of each party.
Transportation tax clause
This clause clarifies tax obligations in logistics and transportation agreements.
Taxes arising from transportation services under this agreement, including fuel taxes, road use fees, and import/export duties, will be borne by the shipper unless otherwise agreed in writing.
Healthcare services tax clause
This clause accounts for tax obligations in healthcare-related contracts.
Any taxes or levies specific to healthcare services provided under this agreement, including medical device taxes or health service fees, will be borne by the provider unless otherwise specified.
Mining and resource extraction tax clause
This clause addresses taxes unique to natural resource agreements.
Taxes or royalties arising from the extraction, production, or sale of natural resources under this agreement will be the sole responsibility of the operator, unless otherwise agreed in writing.
Cross-border digital tax clause
This clause clarifies taxes for digital services offered across borders.
Taxes, including digital service taxes or VAT, arising from the provision of cross-border digital services under this agreement, will be borne by the provider unless otherwise agreed in writing.
E-commerce transaction tax clause
This clause specifies tax responsibilities in e-commerce contracts.
Taxes, including marketplace facilitator taxes or online sales taxes, arising from transactions under this agreement, will be borne by the seller unless the platform operator is required by law to collect and remit such taxes.
Infrastructure project tax clause
This clause addresses tax obligations in large-scale infrastructure projects.
Taxes, fees, or levies related to infrastructure projects under this agreement, including construction-related taxes and permit fees, will be apportioned based on the respective roles and responsibilities of the parties.
Financial services tax clause
This clause covers taxes unique to financial services agreements.
Taxes arising from financial transactions under this agreement, including transaction fees, securities taxes, or bank levies, will be borne by the party initiating the transaction.
Retail sector tax clause
This clause allocates taxes in retail agreements.
Taxes related to retail operations under this agreement, including point-of-sale taxes and inventory-related levies, will be borne by the retailer unless otherwise agreed in writing.
Hospitality and tourism tax clause
This clause addresses taxes in the hospitality and tourism industry.
Taxes related to hospitality services under this agreement, including occupancy taxes, tourism levies, and resort fees, will be borne by the customer unless otherwise stated.
Intellectual property transfer tax clause
This clause specifies taxes related to IP transfers.
Any taxes, transfer fees, or duties arising from the transfer of intellectual property rights under this agreement will be the responsibility of the transferee unless explicitly stated otherwise.
Aviation services tax clause
This clause clarifies tax obligations in aviation agreements.
Taxes, including airport fees, fuel taxes, and aviation-related levies, arising under this agreement will be borne by the carrier unless otherwise agreed in writing.
Import/export-focused tax clause
This clause allocates taxes and duties for international trade agreements.
All import duties, export fees, and customs-related taxes arising under this agreement will be borne by the importer unless otherwise agreed in writing.
Entertainment and media tax clause
This clause clarifies tax responsibilities in entertainment and media contracts.
Taxes arising from the production, distribution, or licensing of media content under this agreement, including performance royalties, streaming levies, or media-specific taxes, will be borne by the content producer unless otherwise specified in writing.
Pharmaceutical tax clause
This clause addresses taxes specific to pharmaceutical supply agreements.
Any taxes, duties, or levies related to the manufacture, distribution, or sale of pharmaceutical products under this agreement will be borne by the manufacturer unless explicitly agreed otherwise.
Construction project tax clause
This clause clarifies tax obligations for construction and related activities.
Taxes, including construction permit fees, equipment levies, and land use taxes, arising from activities under this agreement will be allocated based on the specific tasks undertaken by each party.
Education services tax clause
This clause defines tax responsibilities in educational contracts.
Taxes related to the provision of educational services under this agreement, including tuition-related levies and facility use taxes, will be borne by the service provider unless otherwise agreed in writing.
Cross-border investment tax clause
This clause specifies tax obligations in cross-border investment agreements.
Taxes arising from cross-border investments under this agreement, including withholding taxes on dividends, capital gains taxes, or fund management fees, will be borne by the investor unless otherwise required by law.
Green initiative tax clause
This clause addresses taxes and incentives for environmentally friendly projects.
Taxes, credits, or incentives related to green initiatives under this agreement, such as renewable energy tax credits or carbon offset levies, will be allocated in proportion to the parties’ contributions to the initiative.
Energy sector tax clause
This clause allocates taxes in energy-related agreements.
Taxes, royalties, or levies related to energy production, distribution, or consumption under this agreement will be borne by the operator unless otherwise stated in writing.
SaaS and technology services tax clause
This clause clarifies tax obligations for SaaS agreements.
Taxes, including subscription-related levies, digital service taxes, or other technology-specific taxes, arising from this agreement will be borne by the service provider unless otherwise specified in writing.
Fashion and apparel tax clause
This clause specifies tax responsibilities in apparel contracts.
Taxes related to the production, distribution, or retail of fashion and apparel items under this agreement, including import duties and luxury taxes, will be borne by the manufacturer unless explicitly agreed otherwise.
Logistics and warehousing tax clause
This clause addresses taxes in logistics and warehousing contracts.
Taxes, including storage fees, property taxes on facilities, and transportation levies, arising under this agreement will be borne by the operator of the logistics or warehousing facility.
Maritime transport tax clause
This clause clarifies tax obligations for maritime agreements.
Taxes, duties, and levies related to maritime transport under this agreement, including port fees and vessel registration taxes, will be borne by the shipping company unless otherwise stated.
Agricultural tax clause
This clause allocates taxes in agricultural contracts.
Taxes related to agricultural activities under this agreement, including land use taxes, crop levies, or equipment duties, will be borne by the farmer or producer unless explicitly agreed otherwise.
Event-specific tax clause
This clause addresses taxes for events or conferences.
Taxes arising from event organization under this agreement, including venue taxes, ticketing levies, or concession-related taxes, will be borne by the event organizer unless otherwise agreed in writing.
Cybersecurity services tax clause
This clause specifies tax obligations in cybersecurity contracts.
Taxes, including service-related levies and licensing fees, arising from cybersecurity services under this agreement will be borne by the service provider unless explicitly stated otherwise.
Financial restructuring tax clause
This clause clarifies tax obligations during financial restructuring.
Taxes, including debt-related levies or equity adjustment taxes, arising under this agreement during financial restructuring will be borne by the debtor unless otherwise specified in writing.
Public-private partnership tax clause
This clause allocates taxes in public-private partnerships.
Taxes, including infrastructure development fees and public service levies, arising from this agreement will be allocated between the public and private entities based on their respective contributions to the project.
Aerospace industry tax clause
This clause addresses tax responsibilities in aerospace contracts.
Taxes related to the manufacture, testing, or sale of aerospace products under this agreement, including export duties and aerospace-specific levies, will be borne by the manufacturer unless otherwise agreed.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.