Members of Ruchelman P.L.L.C. contribute to publications throughout the world and the Firm’s monthly tax journal, Insights.
How are foreign trusts, Belgian beneficiaries, and Belgian settlors taxed in Belgium when Belgian law civil law generally does not recognize the existence of trusts? Depending on facts and circumstances, the so-called Cayman Tax Law will tax either the settlor or the beneficiary. Gerd D. Goyvaerts of Tiberghien, Brussels explains.
Read MoreIn France, the enactment of new tax law provisions requires a multi-faceted procedure involving many steps carried out by the government, two houses of parliament, specialized committees, a conference of both houses of parliament, and a review by the French Constitutional Court. Once the full procedure is completed, the new law may be effective retroactively. Many changes in tax law were made in 2016, including the adoption of employee withholding tax, changes to the free share regime, a reduction to the corporate tax rate, extension of exemptions to the corporate tax on the payment of dividends, and the parent-subsidiary regime. Fanny Karaman and Astrid Champion discuss these and other changes.
Read MoreNew powers have been given to H.M.R.C. in recent legislation, and new criminal and civil penalties have been enacted as part of a massive legislative program designed to stop U.K. residents from participating in offshore tax avoidance and evasion schemes. Several criminal penalties are directed to advisory firms that facilitated tax offenses. In certain circumstances, advisory firms based outside the U.K. will be at risk of prosecution. Gary Ashford of Harbottle and Lewis L.L.P., London, and Stanley C. Ruchelman examine the new provisions.
Read MoreIn 2016, the U.S. Treasury Department resurrected an area of the tax law that lay dormant for almost 40 years – the debt-equity regulations under Code §385. As we reminisce on the best of 2016, we offer detailed analysis of the new tax treatment adopted under Code §385. These comprehensive and detailed regulations address whether a debt instrument will be treated as true debt for U.S. income tax purposes or re-characterized, in whole or in part, as equity.
Read MoreThis month, we reminisce on the best of 2016, with articles on the brewing transatlantic trade war disguised as European Commission attacks on illegal State Aid given to U.S.-based groups.
Read MoreOn February 17, 2016, the U.S. Treasury Department released its 2016 Model Treaty. This month, as we reminisce on the best of 2016, we review significant revisions to the baseline text from which the U.S. initiates treaty negotiations.
Read MoreThis month, we reminisce on the best of 2016, with articles contributed by guest authors from around the world.
Read MoreRichard Holme and Simon Tadman of Creaseys, U.K., explain the wonderfully complex set of rules that are applied to determine whether an individual is a resident of the U.K. for income tax purposes and whether a company is a tax resident for corporation tax purposes. Can the new Statutory Residence Test bring certainty to the determination in light of the increase in complexity?
Read MoreThis month Sultan Arab, Nina Krauthamer, and Galia Antebi look briefly at several timely issues, including (i) a Swiss court order granting UBS the right to appeal an administrative order to disclose French client information to French tax authorities, (ii) the expansion of I.R.S. offshore tax avoidance investigations to banks in countries other than Switzerland, and (iii) a continuing controversy over the Common Consolidated Tax Base, known as the C.C.T.B., proposed by the E.U. Commission.
Read MoreA liquidated damage clause in a contract is an attempt by the parties to estimate damages in the event of non-performance or breach of the contract. It represents a way to compensate the aggrieved party for an act of the other party to the agreement. To be enforceable, the amount of the liquidated damages must not be a penalty. Simon H. Prisk explains when these clauses should be used, whether a clause may have a problem regarding its enforcement, and what standards are used for making that determination.
Read MoreThis month, transfer pricing economists Theo Elshof, Olaf Smits, and Mark van Mil of Quantera Global, Amsterdam, explore the European Commission’s definition of the term “arm’s length” in recent State Aid cases. Tax advisers with experience in transfer pricing matters will be surprised to find that reliance on practices of global competitors in the same or similar industry is not relevant when the matter relates to tax rulings comprising State Aid.
Read MoreThe I.R.S. and taxpayers have long argued whether fees paid by one party to another in a failed merger are capital costs or deductible costs. The consequences of capitalization may be severe, as sufficiently large capitalized costs may never be fully offset by future income. Recently, the I.R.S. enunciated a new theory in support of its capitalization position. Kenneth Lobo and Nina Krauthamer look at two recent internal memoranda indicating the I.R.S. will continue to characterize most merger termination costs as capital rather than deductible costs.
Read MoreClients that invest in U.S. real property have discovered that income tax planning for the structure is only once piece of the planning puzzle. A second piece relates to the imposition of transfer taxes on the sale. If the property is in New York City, planning must consider the real property transfer tax rules of both the city and New York State. Both jurisdictions impose tax. Rusudan Shervashidze looks at recent cases in the State of New York Division of Tax Appeals Tribunal and the New York City Appeals Tribunal involving the same plan, implemented by the same taxpayer, regarding the same parcel of real property. For New York State purposes, the plan was successful. However, for New York City purposes, the plan was overturned. The statutes at the state and city level are almost identical.
Read MoreOn October 13, 2016, the Treasury Department released final and temporary regulations under Code §385 relating to the tax classification of debt. The new rules were proposed initially in April and were followed by a torrent of comments from Congress, business organizations, and professional groups. In the final portion of his trilogy on debt-equity regulations, Philip R. Hirschfeld explains the helpful provisions that appear in the final regulations and cautions that not all controversial proposals were modified.
Read MoreShare-based compensation incentives are commonly used by corporations worldwide. Employees defer income or realize income immediately at a low value, and the employer accepts a deferred or reduced deduction for compensation expense. Three or four key moments in the life of a stock-based compensation plan can be identified as taxable events: (i) the grant of share-based compensation, (ii) the exercise of an option, (iii) the “vesting” of the underlying shares, and (iv) their subsequent sale. Fanny Karaman and Stanley C. Ruchelman explore tax treatment in France and the U.S. in the context of a French employee who participates in a French plan and is then assigned to the U.S.
Read MoreThe passage of the Constitution Act, 2016, has brought India one step closer to adopting a national G.S.T. as its new indirect tax structure. The G.S.T. will replace central and state levies with a goal of eliminating multiple taxation of the same transaction. Sakate Khaitan of Khaitan Legal Associates, Mumbai, explains the rates, the coordination among jurisdictions, and the anticipated effect on business. A paradigm shift in the Indian economy is anticipated at both the micro and the macro levels.
Read MoreThis month, the authors look briefly at several timely issues, including (i) the filing of appeals briefs in two major cases lost by the I.R.S., Altera and Xilinx, (ii) recent competent authority activity between the U.S. and India, (iii) the future of U.K. automobile assembly plants operated by U.K. subsidiaries of Japanese automakers, and (iv) final State Department rules concerning the revocation of U.S. passports issued to individuals who have a seriously delinquent tax debt. Kenneth Lobo, Michael Peggs, Nina Krauthamer, and Sultan Arab contribute.
Read MoreAlthough not allowed under New York law, a non-U.S. entity may transfer its corporate charter from a foreign jurisdiction to the state of Delaware and many other states. The process allows a non-U.S. entity to become subject to all of the provisions of state corporate law, and the existence of the corporation is deemed to have commenced on the date the non-U.S. entity was first formed. When the process is completed, the corporation is legally formed under U.S. state law. Simon Prisk explains.
Read MoreMany countries provide a tax deferral benefit for property gains through the form of a reinvestment reserve. Although U.S. tax law does not provide reserves, it does permit a taxpayer to participated in a three-party exchange of properties that may offer deferral benefits that are comparable to a reserve. Most three-party exchanges involve a sale as the first step and a reinvestment of proceeds as the second step, but in some instances, the reinvestment may occur before the sale. The I.R.S. position on these reverse exchanges is that several enumerated hurdles must be overcome before tax deferral is allowed. However, as one recent U.S. Tax Court case demonstrates, the I.R.S. view is not the last word. Rusudan Shervashidze and Nina Krauthamer explain the holding in the case, place it in context, and suggest that it may offer hope for reverse three-party exchanges that do not meet I.R.S. guidelines.
Read MoreIn the context of a model 1 I.G.A. under F.A.T.C.A., the U.S. undertakes certain reciprocal information exchanges. But reciprocal may not mean equal. This produces interesting results when a U.S. foreign trust is formed by a foreign individual. Galia Antebi and Nina Krauthamer compare C.R.S. reporting and F.A.T.C.A. reporting in the context of a U.S. foreign trust that invests in U.S. assets producing tax-free income for a foreign investor.
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