Members of Ruchelman P.L.L.C. contribute to publications throughout the world and the Firm’s monthly tax journal, Insights.
In their article entitled “D.A.C.6 – The Italian Way,” Fabio Chiarenza and @Carmen Adele Pisani of Gianni & Origoni, Rome, address the Italian rules implementing D.A.C.6. In comparison to advisers in other Member States who point out the areas in which guidance is sorely missed, the authors are able to take a deep dive into already issued Italian guidance, giving examples of how the guidance works in real life.
Read MoreIn their article entitled “French Administrative Pronouncements on D.A.C.6,” Mallory Labarriere and Anne-Lise Chagneau of Nexa Avocats, Paris, have prepared the ultimate guide to D.A.C.6 rules in France.
Read MoreIn their article entitled “Update on Spanish Mandatory Disclosure Regime – D.A.C.6,” José María Cusi, Juan Roda Moreno, and Cristina Rodríguez Lluch of CHR Legal, Barcelona, explain the problems encountered when Spanish law adopts D.A.C.6 terms that have no legal meaning in Spain, and do so without definition.
Read MoreIn his article entitled “D.A.C.6 in Ireland – Key Features of the Administrative Guidance,” Martin Phelan of Simmons & Simmons, Dublin, addresses the rules that apply to “cross-border arrangements” that will be reportable if one or more relevant “Hallmarks” are applicable. His F.A.Q.’s allow the reader to focus easily on the most important issues and answers.
Read MoreIn her article entitled “D.A.C.6 Implementation in Cyprus,” Nairy Merheje, of Der Arakelian-Merheje LLC in Nicosia, explains how Cyprus intends to overcome these challenges so that the Cyprus government can target and capture potentially aggressive tax planning arrangements resulting in tax base erosion of one or more E.U. Member States.
Read MoreThe concept of a “tax home” is somewhat difficult to explain to persons resident outside the U.S. It has its origin in case law involving taxpayers who work at a temporary location for a finite, but long, period of time. Could the taxpayer deduct living costs incurred in the temporary location when the assignment bears a resemblance to a business trip, albeit for a much longer period of time. From there, it morphed into a requirement for U.S. expats wishing to claim the benefit of the foreign earned income exclusion and its companion provision, the housing deduction. In the case of a pilot who flies between a rotation of airports, and in many instances, between a rotation of countries, what test is used to determine the pilot’s tax home? Is it where the pilot happens to be at any time as is the rule for an itinerant worker? Is it where the pilot lives with his family? Is it the starting place for an outbound journey? Is it another place? Gianluca Mazzoni, who holds an S.J.D. ‘20 and L.L.M. ’16 from the University of Michigan Law School, analyzes Cutting v. Commr., a case involving a pilot. The article address the terms “bona fide resident” and “place of abode,” each of which has a meaning for expats claiming the benefits mentioned above.
Read MoreIn Through the Looking-Glass, Humpty Dumpty advises Alice that when he use a word it means just what he chooses it to mean – neither more nor less. The same may be trues with regard to treaty based exchanges of information. When language in a treaty seems to prevent a treaty partner state from misusing the exchange of information provision, the affected individual may have no recourse to prevent the enforcement of an I.R.S. summons. Andreas A. Apostolides and Stanley C. Ruchelman explain that courts in the U.S. will not typically question the good faith of the foreign tax authority.
Read MoreEquity-based compensation has long been a popular way to attract talent and align the interests of corporations and service providers. This type of compensation allows cash-poor companies to attract highly skilled individuals to join the company workforce or its board of directors. With mobility that existed in the pre-pandemic world, noncitizen individuals have moved to the U.S. becoming U.S. tax residents at the time of vesting or exercising conversion rights. Galia Antebi and Nina Krauthamer examine the tax rules in the U.S. Also discussed is the cross-border tax problem that arises when equity based compensation is taxed at different times in the home country and the U.S. and no effective mechanism is available to eliminate double taxation.
Read MoreIn Coca-Cola Co. & Subsidiaries v. Commr., the taxpayer learned an important lesson for multinational groups using a residual profit split method to determine intercompany transfer prices. The factual underpinning of a residual profit split is critical to method selection, best method analysis, and selection of a reliable split metric when applying the method. In the case, the taxpayer relied on a favorable resolution of transfer pricing issues in an examination of earlier years and failed to confirm the continued existence of favorable facts. Michael Peggs explains all. Resolution of an examination does not provide the same certainty as an advance pricing agreement.
Read MoreThe Corporate Transparency Act (“C.T.A.”) was signed into law during the waning days of the Trump Administration. When effective, the C.T.A. will require businesses to disclose Beneficial Owner information to FinCEN at the time of company formation and when material changes are made in a subsequent year. Roxana Diaz, Corporate Administrator in the Miami Office of Corpag Registered Agents (USA), Inc., answers the eleven most important questions that affect persons incorporating a business and the professionals providing advice or assistance in the incorporation process.
Read MoreThe French Trust Register was introduced in December 2013 by a law enacted to stop tax fraud and serious economic and financial crimes. In October 2016, the French Constitutional Court ruled that public access to the Trust Register was unconstitutional. In the period since that decision, French authorities have issued two rulings allowing a broad class of persons to gain access to trust data. including tax officers, customs officials, professionals having compliance duties to combat money laundering and terrorist financing, journalists, and N.G.O.’s. Dimitar Hadjiveltchev, Partner, Adea Meidani, Counsel, and Loïc Soubeyran-Viotto, Associate, all of CMS Francis Lefebvre Avocats in Paris, address recent events regarding French tax treatment of foreign trusts and beneficiaries. They begin with the trust register – who must report, what must be reported and who have access – and move on to explain the myriad of taxes that may be imposed on trusts, settlors, and beneficiaries including income tax on distributions, inheritance and gift taxes, and real estate wealth tax.
Read MoreAt midnight on the December 31, 2020, the U.K. left the E.U., having secured a Free Trade Agreement (“F.T.A.”). The farewell headline grabber in the drawn-out departure process relates to D.A.C. 6, the Mandatory Disclosure Reporting (“M.D.R.”) rule that applies to Intermediaries. Beginning in 2021, the only reporting that will be required in the U.K. will involve the Category D Hallmark. It applies to fact patterns that are designed to hide ownership. Here, reporting will be required to maintain the integrity of the O.E.C.D. M.D.R. Gary Ashford, a Partner (non-lawyer) of Harbottle and Lewis L.L.P., London, explains the Category D Hallmark and the ongoing reporting requirements that apply to U.K.-based intermediaries after Brexit.
Read MoreIn a post B.E.P.S. world, tax transparency is a mantra among stakeholders in government, media, and nongovernmental organizations. The taxpayer may own the funds, but the stakeholders wish to ensure that a chunk of the funds are spent as they deem appropriate. In this environment, governments have a stake in obtaining information on where taxpayers hold their funds and exchanges of information between governments has become a regular occurrence. In the European Union, questions arise as to whether an information request violates a taxpayer’s fundamental rights, and in the event of a fishing expedition, whether the taxpayer has an effective remedy. In a recent decision issued by the E.C.J., the court held that financial institutions holding information have rights to intervene, but not taxpayers must wait until a tax authority assesses tax. Werner Heyvaert, a partner in the Brussels Office of AKD Benelux Lawyers and Vicky Sheikh Mohammad, an associate in the Brussels Office of AKD Benelux Lawyers, explain the rationale of the court and question the validity of its conclusion.
Read MoreAs 2020 comes to a close, Subpart F is approaching its 59th anniversary as part of the Internal Revenue Code. During that period of time, various portions have been revised, but by and large, the branch rule has remained untouched. Under that rule, a C.F.C. based in a country that exempts income of a permanent establishment can be treated as two companies where manufacturing takes place in one country and selling activity takes place in a different country. From a U.S. viewpoint, the same abusive tax planning can be undertaken between the head office and the branch as can be undertaken between brother-sister or parent-subsidiary C.F.C.’s. Nonetheless, no taxpayer ever lost a case brought by the I.R.S. until this year. In Whirlpool Financial Corp. v. Commr., Whirlpool Corporation determined that the branch rule regulations were invalid when manufacturing operations were conducted by the branch and selling activities were conducted by the head office. Arguing that the law permitted the loophole because a single corporation conducted the manufacturing operations, Whirlpool became the first U.S. Shareholder to lose a case in which the I.R.S. asserted the application of the branch rule to a manufacturing branch. Gianluca Mazzoni, S.J.D. 2020 and L.L.M.2016 International Tax, University of Michigan Law School, explains the plan that was adopted, the argument presented by the taxpayer, the decision of the court, and the likely issues that will be addressed on appeal.
Read MoreIn late 2019, the I.R.S. proposed regulations modifying rules for determining the source of income from sales of inventory property produced by a taxpayer outside the U.S. and sold within the U.S., or produced by the taxpayer within and sold without the U.S. Final regulations were published in October. The regulations implement changes made by the Tax Cuts and Jobs Act provide guidance under Code §865(e)(2) regarding sales of inventory through a U.S. office or fixed place of business. In her article, Léa Verdy, an attorney admitted to practice in New York and Paris, presents the sourcing rules for sales of inventory before the T.C.J.A, the changes implemented by the T.C.J.A., the guidance offered by the I.R.S., and the consequences of the regulations for taxpayers.
Read MoreLike Spiderman, it is imperative that controlling shareholders of foreign corporations must recognize that if they have the power to control a foreign corporation, they face a greater responsibility when filing Form 5471, the reporting form for ≥10% shareholders. Neha Rastogi and Galia Antebi take a deep dive into the reporting obligations of a Category 4 Filer. Must read for those U.S. persons that reside outside the U.S. and operate through owner managed businesses.
Read MoreIt seems in the world of transfer pricing litigation, a pattern of mutual expectations has emerged. Companies expect tax authorities to take revenue-maximizing positions and expect courts see the issue more clearly and vacate or substantially vary the assessment of the tax authority. At the same time, tax authorities expect that courts will uphold audit findings of material transfer pricing income adjustments using methods and data overlooked or ignored by companies. In October, the Danish Tax Agency received a decision from the Western High Court concerning an appeal originating from a transfer pricing audit commenced in 2006. Michael Peggs explains the reasons for the 14-year marathon and ponders whether transfer pricing norms in a post-B.E.P.S. world will put an end to this type of examination.
Read MoreIndividual Taxpayer Identification Numbers (“I.T.I.N.’s”) are required by any individual who has a U.S tax filing obligation but is not eligible to be issued a Social Security Number. Without affixing an I.T.IN to a document filed with the I.R.S., it is extremely difficult for the document to be tracked by I.R.S. computers. When used on documents, an I.T.I.N. expires every five years. Otherwise, it expires after three consecutive years of non-use. In a series of F.A.Q.’s, Galia Antebi and Samantha Benenson address important questions. When do I.T.I.N.’s expire? Should you renew your I.T.I.N. if you are issued an S.S.N.? What are the implication of an expired I.T.I.N.? Can an I.T.I.N. be renewed before it is set to expire?
Read MoreEarlier this year, the I.R.S. updated its Transfer Pricing Documentation Best Practices F.A.Q. list with a response to Q. 4. What are some areas the I.R.S. has identified in transfer pricing documentation reports that could benefit from improvement? It seemed to be a reaction to two events on the global tax stage. First, the I.R.S. regularly encounters too many suboptimal reports that provide unreliable data leading to a prolonged examination. Second, recent activity in the European Union and the O.E.C.D. suggest that U.S. taxpayers face claims of local value-creation by foreign tax authorities, resulting in increased foreign income allocations. Such allocations reduce the U.S. tax base. Michael Peggs discusses do’s and don’ts explained by the I.R.S., and the benefits that are obtained from a robust transfer pricing report, both within budget-related considerations of a global company.
Read MoreRemember when tax planning was an exercise in solving two or three potential issues for a client? Memorandums ran eight pages or so. Those days are long gone, especially when planning for a non-U.S. individual’s purchase of a personal use residence in the U.S. A myriad of issues pop up once the property is identified, so that planning which begins at that time often misses significant tax issues encountered over the period of ownership and beyond. Michael J.A. Karlin, a partner of Karlin & Peebles, L.L.P., Los Angeles, and Stanley C. Ruchelman, address the big-picture issues in an article that exceeds 50 pages. Included are issues that arise leading up to the acquisition, during ownership and occupancy, the time of disposition, and at the conclusion of life. The article is the “go-to” document for tax planners.
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