Members of Ruchelman P.L.L.C. contribute to publications throughout the world and the Firm’s monthly tax journal, Insights.
This month, "Updates & Tidbits" looks at two recent developments in the E.U. The first relates to findings of illegal State Aid in the form of private rulings given by Luxembourg and the Netherlands – Starbucks and Fiat plan to appeal. The second relates to double dipping of tax benefits when establishing I.P. box companies.
Read MoreRecent developments in the F.A.T.C.A. practice include upgrades to the online registration system, a flurry of competent authority arrangements signed with other countries, F.A.T.C.A. guidance issued by the Turks and Caicos Islands, new authorizing statutes in Russia and Georgia, an implementing memorandum in Germany, an I.G.A. with Angola, updated F.A.Q.’s, and a list of Model 1 and Model 2 I.G.A. partner countries.
Read MoreMany of our clients instruct us from outside the United States to establish companies through which an acquisition or some other transaction will be conducted. After completing our “know your client” obligations for a matter involving a new client, the home country advisors instruct us to form the entity and open a bank account. This month, Simon Prisk looks at directors and officers insurance policies designed to protect incumbents from liability claims based on a failure to supervise the actions of a company. He cautions management to be wary of coverage gaps when comparing policies and costs.
Read MoreThe latest step in inversion controversy involving U.S. publicly traded corporations is the upcoming merger between pharmaceutical giants, Pfizer and Allergan, in a stock transaction estimated to be worth $160 billion. Kenneth Lobo and Stanley C. Ruchelman look at recent I.R.S. countermeasures attacking cross-border mergers that the I.R.S. views as inversions. Among other measures, rules are announced to limit planning alternatives using check-the-box entities to stuff assets into an acquirer without exposing those assets to tax in the jurisdiction of residence of the acquirer and use of parent-company stock as the consideration for the acquisition.
Read MoreLast month, Christine Long analyzed the basis of the I.R.S. motion for summary judgment in Mylan Inc. v. Commr., a case addressing whether a license that relinquishes all substantial rights in a patent is the equivalent of a sale, so that basis can be recovered and capital losses can reduce the resulting capital gain. This month, she analyzes the taxpayer’s opposition to the motion. In addition to the existence of material questions of fact that were ignored by the I.R.S., the taxpayer argues economic substance in support of its position and evaluates the rights that were transferred and those that were retained.
Read MoreWith all the brouhaha over the announced Alibaba spinoff by Yahoo!, Elizabeth V. Zanet explains the circumstances in which a corporate division – known as a demerger in many countries – can be achieved in a tax-free manner under U.S. tax law. The path is not easy as these divisions are the lone vestiges allowing tax-free corporate distributions of appreciated assets under U.S. tax law.
Read MorePartnerships owning real estate or other assets sometimes take aggressive tax positions that may invite I.R.S. scrutiny. Philip R. Hirschfeld and Nina Krauthamer explain the new partnership audit rules enacted by Congress in November as part of the Bipartisan Budget Act of 2015. With limited exception, partnerships will become liable for tax increases arising from audit adjustments. This treatment raises the importance of tax indemnities when partnership interests are acquired.
Read MoreAs part of our series addressing favorable tax rules for non-domiciled resident individuals in various countries, Alexandra Courela and Susana A. Duarte of Abreu Advogados in Lisbon explain the Portuguese approach in extending tax benefits to new arrivals holding “Golden Visas” or who otherwise qualify for work-related visas for the performance of designated high value activities. Employment income from services performed in Portugal is taxed at a low rate and foreign source service income may be exempt from tax if certain conditions apply. Foreign-source plain vanilla investment income and gains may be exempt, too.
Read MoreContinuing our series on favorable tax rules for non-domiciled resident individuals, Guy Katz and Danielle Halimi of Herzog Fox and Neeman in Tel Aviv explain the Israeli tax benefits for those individuals who are categorized as “New Immigrants.” Benefits begin with a ten-year exemption for foreign-source income and gains – the exemption applies to both tax and information reporting. Regular returning residents receive generous but scaled back benefits. Remittances from abroad are not penalized with tax.
Read MoreHeard of the “Beckham Law” that limits income tax in Spain for certain non-domiciled individuals? Think of European football (soccer) players. Pablo Alarcón Espinosa of Alarcón-Espinosa, Abogados in Madrid explains how persons migrating to Spain for work purposes can avail themselves of a reduced tax regime for domestic income and an exemption for foreign income and gains. Like Switzerland, remittances from abroad are not penalized with tax.
Read MoreThe Swiss forfait tax regime is discussed by Michael Fischer of Froriep in Zurich. The forfait is battle-tested and has beaten back a referendum in 2014 that would have repealed the benefit. Beware – the forfait is not available in all cantons and the minimum tax rate varies widely. In comparison to the U.K. and Ireland, remittances from abroad are not penalized with tax.
Read MoreThe benefits and possible pitfall of Ireland’s non-domiciled taxation rules are explained by Lisa Cantillon and Jane Florides of Kennelly Tax Advisers in Dublin. Remittance based taxation remains strong in Ireland, but planning is required to steer clear of deemed remittance traps and to minimize inheritance tax exposure.
Read MoreWith the 15-year limit enacted to remittance based tax rules for non-domiciled individuals resident in the U.K., we offer a series of articles this month addressing favorable tax rules for non-domiciled resident individuals in several countries. Gary Ashford of Harbottle and Lewis L.L.P. in London is the lead-off author, explaining the U.K. tax and immigration rules and suggesting strategies for the long-term non-domiciled resident who faces the 15-year ceiling. The ceiling becomes effective in 2017.
Read MorePublished in Taxes & Wealth Management by Thomson Reuters, Issue 8-4: November 2015.
Read MoreDespite efforts to repeal F.A.T.C.A. in the U.S. and opposition from abroad, it appears that F.A.T.C.A. is here to stay. Galia Antebi and Philip R. Hirschfeld address the recent September 30 milestone and the advent of exchanges of financial account information with tax administrations of I.G.A. partner jurisdictions.
Read MoreFollowing months of debate, the Indian Finance Ministry recently clarified that the Minimum Alternate Tax (M.A.T.) will not apply to foreign companies that do not have a permanent establishment and/or place of business in India. Shibani Bakshi and Sheryl Shah discuss why the announcement is an affirmation of India’s positive attitude towards foreign investment. The next move is up to the Indian Revenue.
Read MoreThe question of the proper treatment of a contract transferring exclusive rights to the use of a patent – as a sale or a license – is one that has been addressed many times in U.S. jurisprudence. It has recently popped up again in a case before the U.S. Tax Court involving the generic pharmaceutical giant Mylan Inc., a company that has been the subject of much negative publicity arising from its inversion and subsequent re-immersion as a U.S. domestic company. In September, the I.R.S. filed a memorandum in support of a motion for summary judgment. We explain the basis for the I.R.S. position and comment on its merits.
Read MoreFor many tax advisers, it is fashionable to complain about the O.E.C.D.’s B.E.P.S. project because it imposes an unrealistic standard of behavior on multinational groups. Then, along comes a case such as Russian Recovery Fund, Ltd. v. U.S. and one understands the problem of real base erosion. The case involved a distressed asset/debt (D.A.D.) transaction. Here, hubris and greed in the financial services sector team up to make the O.E.C.D. look good.
Read MoreThe phrases “green card” and “U.S. citizen” have the ability to strike panic and even terror in tax advisors around the world. What inspires this fear? What tax challenges do foreign individuals face when they are present in the U.S. on a temporary, non-immigrant basis?
Read MoreIn late September, the Obama Administration released the tax revisions that are part of its Fiscal Year 2016 Budget Proposal (the Proposal). These changes are designed to provide deficit reduction measures through additional revenue increases and spending cuts. We explain the new twists to seasoned proposals. If enacted, the changes described in the Proposal could influence global patterns of investment and employment by U.S. multinationals.
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