Tag Archives: Income Tax

Inbound and Outbound U.S. Tax Planning – What’s Left After the MLI?

The Multilateral Instrument On June 7, 2017, the formal signing ceremony of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the “Multilateral Instrument” or “MLI”) took place.  Sixty-eight jurisdictions have signed the MLI, with another nine jurisdictions signing a letter indicating their intent to sign the MLI.[1] … Continue Reading

Creating Non-Taxed “Previously Taxed Income”: The Ultimate Pre-Immigration Strategy

According to recent statistics, immigrants and their U.S.-born children now number approximately 84.3 million people, or 27% of the overall U.S. population.   The countries from which the largest numbers of these individuals originate include India, China, Mexico, and Canada.  Many of those moving to the United States are wealthy business owners who will continue to … Continue Reading

Change in the UK Treatment of Dual-Resident Companies May Affect U.S. Tax Planning

On November 30, 2015, the UK tax authorities at HM Revenue and Customs (HMRC) reached an agreement with Jersey about the interpretation of the company residence tie-breaker provision of the Jersey-UK income tax treaty.  After reviewing other income tax treaties that contain similar provisions, HMRC will now take the view that the tie-breaker clause will … Continue Reading

Use of Estonia in U.S. International Tax Planning

According to recent estimates, Estonia, which is situated halfway between Stockholm and St. Petersburg, currently has more than 350 start-up technology companies – one for every 3,700 citizens – and the government expects this number to reach 1,000 by the year 2020. This makes Estonia the number one start-up technology country in Europe and one … Continue Reading

Commission Payments to IC-DISC Recharacterized as Non-Deductible Dividends

In Summa Holdings, Inc. v. Commissioner, T.C. Memo 2015-119, the Tax Court recharacterized an exporter’s deductible commission payments made to an IC-DISC as non-deductible dividend payments to the exporter’s shareholders followed by contributions by those shareholders to certain Roth IRAs. The Tax Court mentioned that there was “no nontax business purpose or economic purpose for … Continue Reading

Recent Chilean Tax Reform Reinforces Need for U.S. Tax Treaty

Chile is the fifth largest economy in South America and increasingly one of the most significant U.S. trading partners in the region. U.S. foreign direct investment into Chile was $39.9 billion for 2012 (the latest year for which official figures are available). And in 2013, the U.S. exported $17.6 billion of goods and services to … Continue Reading

Local Law Shopping Through “Derivative Benefits”

Unlike U.S. persons who are subject to U.S. federal income tax on their worldwide income, foreign persons generally are subject to U.S. taxation on two categories of income: (i) certain types of passive U.S.-source income (e.g., interest, dividends, royalties and other types of “fixed or determinable annual or periodical income,” collectively known as FDAP), which … Continue Reading

Retroactive Tax Planning

Converting Subpart F Income into Qualified Dividends U.S. shareholders of foreign corporations are generally not subject to tax on the earnings of such corporations until the earnings are repatriated to the shareholders in the form of a dividend.  Moreover, when a foreign corporation is resident in a jurisdiction with which the United States has a … Continue Reading

Tax Planning for the Privatization of the Space Industry

The privatization of the space industry has seen dramatic growth in recent years, and it appears that more significant developments are on the horizon. During 2013, SpaceX (the space exploration company founded by Elon Musk, co-founder of PayPal and Tesla Motors) successfully launched a major communications satellite into orbit for a private satellite operator, and became … Continue Reading

Foreign Investment in the U.S. Through Romania Just Became More Interesting

All “modern” income tax treaties concluded by the United States contain a “Limitation on Benefits” (LOB) provision.  The purpose of such a provision is to prevent “treaty shopping.” Romania is one of the few remaining countries that have comprehensive income tax treaties with the United States that do not contain LOB provisions. Romania recently enacted … Continue Reading
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