January 26, 2017

Foreign Charities active in the U.S. – Public? Or Private Foundations?

January 26, 2017/ Ruchelman P.L.L.C.

Foreign nonprofit organizations have become more active in the U.S. in carrying out their charitable mandates. Such activities include performances in the U.S. by foreign artistic companies and the use by U.S. charities of technology and know-how developed by foreign charities. Fees earned by foreign charities could be subject to U.S. income or withholding taxes, but those taxes can be reduced or eliminated if specific procedures are followed. Much will depend on the status of organization as a “public charity” or a “private foundation,” terms that make reference to the organization’s funding sources. Nina Krauthamer and Galia Antebi explain the U.S. rules that are applicable.

January 26, 2017

New Zealand Foreign Trust Disclosure Regime

January 26, 2017/ Ruchelman P.L.L.C.

In April 2016, the New Zealand government convened an independent inquiry into the use of New Zealand foreign trusts. Following this inquiry, a new foreign trust disclosure regime was proposed to obtain information on ultimate beneficial ownership. Heather Howell, who heads the office of Trident Trust Group in Auckland, New Zealand, explains.

January 26, 2017

Looking to the Future: European Efforts Against Tax Evasion Take Center Stage – Where Will It Take Us?

January 26, 2017/ Ruchelman P.L.L.C.

A globalized economy has been the driving force behind cross-border tax transparency and increased dissemination of tax information in recent years. The importance of F.A.T.C.A. reporting has paled as the O.E.C.D. Common Reporting Standard has taken effect in the E.U., State Aid cases are progressing, and country-by-country reports may be publicly available. Europe and the U.S. are moving in different directions. Philip R. Hirschfeld and Stanley C. Ruchelman explain.

January 26, 2017

Trump and the Republican-Led Congress Seek Overhaul of International Tax Rules

January 26, 2017/ Ruchelman P.L.L.C.

Elizabeth V. Zanet and Beate Erwin compare the proposals that comprise the Trump tax plan and the House Republican Tax Reform Blueprint, which will be submitted to Congress as part of a massive overhaul of U.S. tax law. Tax rates for individuals and corporations would likely be lowered, the standard deduction would be increased, and capital gains tax rates would remain at the same level. The net investment income tax would be repealed. The estate tax and generation skipping tax would be repealed. The gift tax would remain. Other provisions are discussed, also.

January 26, 2017

Income Taxation of Trusts in Belgium

January 26, 2017/ Ruchelman P.L.L.C.

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.

January 26, 2017

News on the French Front: Tax Law Changes for Corporations and Individuals

January 26, 2017/ Ruchelman P.L.L.C.

In 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.

January 26, 2017

U.K. Criminal Penalties for Improper Tax Planning – Could You Be Effected?

January 26, 2017/ Ruchelman P.L.L.C.

New 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.

December 22, 2016

The Resurrection of Code §385: Treasury Department Revises Regulations on Related-Party Debt

December 22, 2016/ Ruchelman P.L.L.C.

In 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.

December 22, 2016

European State Aid: The Makings of A Global Trade War

December 22, 2016/ Ruchelman P.L.L.C.

This 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.

December 22, 2016

The 2016 U.S. Model Income Tax Treaty

December 22, 2016/ Ruchelman P.L.L.C.

On 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.

December 22, 2016

A Year of Guest Features

December 22, 2016/ Ruchelman P.L.L.C.

This month, we reminisce on the best of 2016, with articles contributed by guest authors from around the world.

December 22, 2016

U.K. Tax Residency Rules for Individuals and Companies

December 22, 2016/ Ruchelman P.L.L.C.

Richard 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?

November 30, 2016

Insights Vol. 3 No. 10: Updates & Other Tidbits

November 30, 2016/ Ruchelman P.L.L.C.

This 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.

November 30, 2016

Corporate Matters: Should a Liquidated Damages Clause be Included in a Contract?

November 30, 2016/ Ruchelman P.L.L.C.

A 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.

November 30, 2016

European Commission Rocking the Boat at Arm's Length

November 30, 2016/ Ruchelman P.L.L.C.

This 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.

November 30, 2016

I.R.S. Adds New Theory Why Merger Termination Fees are Capital Rather than Deductible Costs

November 30, 2016/ Ruchelman P.L.L.C.

The 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.

November 30, 2016

In the Matter of GKK 2 Herald LLC – Effects of the Step Transaction Doctrine

November 30, 2016/ Ruchelman P.L.L.C.

Clients 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.

November 30, 2016

French v. U.S. Share-based Compensation Plans: A Comparative Analysis

November 30, 2016/ Ruchelman P.L.L.C.

Share-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.

November 30, 2016

Goods and Services Tax: A Game Changer

November 30, 2016/ Ruchelman P.L.L.C.

The 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.