Arm’s length

In business, an arm's length transaction is a deal in which the buyers and sellers act independently and do not have any relationship to each other. The concept of an arm's length transaction assures that both parties in the deal are acting in their own self-interest and are not subject to any pressure or duress from the other party. Both parties usually have equal access to information related to the deal. It also assures third parties that there is no collusion between the buyer and seller.

word use: Having a independent director adds a arm's length distance of decision making, especially in tax structures for a company.

Arm's Length vs. Arm-in-Arm Transactions.

In general, family members and companies with related shareholders are not considered to be transacting at arm's length. These types of  deals are also known as arm-in-arm transactions.

**Special Considerations

Important: Tax laws throughout the world are designed to treat the results of a transaction differently when parties are dealing at arm's length and when they are not.