Tax indemnity

Synthetic Prime Brokerage Anatomy™ →Go uptown Synthetic prime brokerage is documented under the 2002 ISDA Equity Derivatives Definitions, so read this anatomy in conjunction with our wider Equity Derivatives Anatomy. See also our Prime Brokerage Anatomy. Index: Click ᐅ to expand: Synthetic Prime Brokerage Prime Brokerage Equity Derivatives Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

The best kind of indemnity. One of the few occasions where contractual indemnity is generally justified and reasonable — if an unexpected tax is imposed on one party in respect of its activity in providing a service (holding assets in custody for example) for the other. It ticks all the boxes of a good indemnity: It relates to liabilities one party incurs carrying out activity for which the other party (exclusively) benefits; it is precise, specific and easy to articulate; it is a genuine contingency in that it is hard to anticipate and therefore cost into one’s service; if it does come about, a tax amount is deterministic in amount, and doesn’t open up the indemnifying person to indeterminate liability.

See also

• Indemnity
• Contingent liability