Prior to the December 2017 enactment of the “Tax Cuts and Jobs Act” (the “Act”), common tax wisdom was to avoid placing international operations under a U.S. corporation (a “US Topco”). The high U.S. corporate tax rate (35%) and the worldwide taxation of foreign profits (subject to deferral in some cases) made the United States very unattractive as a holding company jurisdiction. Now that the Act has lowered the headline corporate tax rate to 21% and adopted an exemption for most dividends from foreign corporations, the old wisdom has been turned on its head. Especially where an international group will be ultimately owned by individuals (including through private equity funds) who do not benefit from these and other changes, it may be time to consider placing international groups under a U.S. corporate umbrella.
After Tax Reform, Should Your Multinational Group Be US Parented?
Copyright © 2019 Weil, Gotshal & Manges LLP, All Rights Reserved. The contents of this website may contain attorney advertising under the laws of various states. Prior results do not guarantee a similar outcome. Weil, Gotshal & Manges LLP is headquartered in New York and has office locations in Beijing, Boston, Dallas, Frankfurt, Hong Kong, Houston, London, Miami, Munich, New York, Paris, Princeton, Shanghai, Silicon Valley, Warsaw, and Washington, D.C.