Although there are transfer pricing guidelines and rules on cost contribution arrangements, views differ on the extent to which active involvement should be regarded as a prerequisite for the underlying cost contribution arrangement under the arm’s length principle. This article addresses the issue of active involvement and whether it should be a prerequisite for sharing in the benefits derived from joint intangible developments through a cost contribution arrangement or cost-sharing arrangement. The article explores how the arm’s length principle has been interpreted in the Dutch Decree on Cost Contribution Arrangements, and whether this interpretation differs from that of the OECD Transfer Pricing Guidelines, the relevant ATO Taxation Ruling and the IRS Final Regulations.