Tax indemnity

Synthetic Prime Brokerage Anatomy™ →Go uptown Synthetic prime brokerage is documented under the 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