Tax Planning for International Mergers, Acquisitions, Joint Ventures and Restructurings

Name: Tax Planning for International Mergers, Acquisitions, Joint Ventures and Restructurings
Brand: Wolters Kluwer
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Ansgar A. Simon(Herausgeber*in)

Wolters Kluwer (Verlag)

6. Auflage

Erschienen am 31. August 2023

2384 Seiten

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Inhalt

Intro
Half-Title Page
Title Page
Copyright Page
Editor
Contributing Authors
Summary of Contents
Contents of Volume I and II
Introduction
Part I General Overview
Chapter 1 Key Global Tax Concerns
§1.01 INTRODUCTION
§1.02 DEAL STRUCTURE OF ACQUISITIONS
[A] General
[B] Share Transaction
[C] Asset Transaction
§1.03 TAX ASSETS AND OTHER TAX ATTRIBUTES
§1.04 ACQUISITION AGREEMENT: KEY TAX PROVISIONS
[A] Definition of "Taxes" and of "Excluded Taxes"
[B] Interaction of Taxes with Purchase Price Adjustment for Changes Between Signing and Closing
[C] Allocations of Purchase Price
[D] Tax Representations and Warranties
[E] Covenants Concerning Tax Matters
[1] Covenants in Favor of Acquiror
[2] Covenants in Favor of Seller (Transferor)
[F] Tax Indemnification Provisions and Related Provisions
[G] Conveyance Taxes
[H] Cooperation and Record Retention
§1.05 ADDITIONAL ACQUIROR CONSIDERATIONS
[A] Due Diligence
[B] Financing Considerations
[C] Acquisition Structure of Acquiror
[D] Post-acquisition Structuring
§1.06 PROCESS
[A] Introduction
[B] Importance of Early Counselling of Client's Deal Personnel
[C] Allocation/Coordination of Tax Advisor Roles
[D] High-Level Structuring
[E] Electronic Data Room
[F] Acquisition Document
[1] Single Bidder
[2] Auction
[3] Alternative Bids
[G] Negotiation of Open Points
[H] Preparation of Disclosure Schedule
[I] Closing (Completion)
Chapter 2 Due Diligence
§2.01 INTRODUCTION
§2.02 TARGET'S TAX EXPOSURES, TAX ASSETS, AND TAX ATTRIBUTES
[A] Identify Tax Exposures
[1] General/Financial Accounting Standards
[2] Direct Taxes
[3] Indirect Taxes
[4] Withholding Taxes
[5] Employment Taxes
[6] Tax Indemnity Given to Third Party
[7] Group Tax Liability
[B] Identify Tax Assets
[1] Rights to Refunds
[2] Loss Carryovers
[3] Credit Carryovers
[4] Carry Back Potential
[C] Identify Other Tax Attributes
[1] Tax Incentives/Tax Holding
[2] Tax Rulings or Accepted Settlement Practice
[3] Fiscal Year
[4] Tax Elections
§2.03 PROCESS OF DUE DILIGENCE
[A] Seller
[B] Acquiror
[C] Considerations of Attorney-Client Privilege and Related Rules
[1] Target's Provision of Privileged Communications to Acquiror
[2] Issues Regarding Acquiror's Due Diligence
§2.04 DUE DILIGENCE DOCUMENTATION AND QUESTIONS GROUPED BY SUBJECT
[A] General
[B] List of Documentation and Information Typically Sought
[1] General Documentation and Information
[2] Tax Contingency Exposures and Reserves
[3] Tax Examinations and Disputes
[4] Permanent and Timing Differences, Tax Provision, Effective Tax Rate, and Reconciliations
[5] Tax Accounting Issues
[6] Intercompany Transactions (Including Financings) and Transfer Pricing
[7] Consolidated or Combined (or Other Grouping) Return Issues
[8] Withholding and Other Compliance Matters
[9] State/Provincial Income, Franchise, Trade, Etc., Taxes
[10] Historic Acquisitions, Dispositions, and Restructurings by or Involving Target
[11] Employee Plans
[12] Miscellaneous Common Direct Tax and Compliance Exposures
[13] Tax Assets and Attributes
[14] Offshore Cash and Tax Positions
[15] VAT, GST, Sales and Use, and Similar Taxes (National and Subnational)
[16] Real and Personal Property Taxes
[17] Taxes on the Transaction Itself
[18] Effect of Transaction on Other Contracts or Arrangements
[19] Information Regarding Target Tax Planning Strategies
Chapter 3 Tax Indemnities
§3.01 INTRODUCTION
[A] Purpose and Convention of Seller Indemnification Against Pre-closing Taxes in Nonpublic Sale
[B] Situations in Which Seller Indemnification May Not Be Available
§3.02 IDENTIFY EXPOSURES BY TYPE OF DEAL
[A] Direct Taxes
[B] Indirect Taxes
[C] Withholding Taxes
[D] Fiduciary Taxes
[E] Interest Charge and Penalties
[F] Carryback Potential
[G] Tax Indemnity Given to Third Party
[H] Group Tax Liability
[I] Need for Cooperation and Records
[J] Credit/FX/Tax Risks from Indemnity Itself
[K] Effect on Post-closing Liability If Continued Inclusion in Subgroup with Seller
§3.03 CONSIDER ALTERNATIVE TAX RISK MINIMIZATION APPROACHES
[A] Buy "As Is" and Due Diligence
[B] Representations and Warranties
[C] Indemnity
[D] Preclearance with Tax Authorities/Ruling
[E] Asset Purchase
[1] Bulk Sale and Similar Exemptions to Avoid Certain Seller Tax Obligations
[2] Elective Asset Purchase
[F] Tax Insurance
§3.04 LIMITS/EFFICIENCY OF INDEMNITY APPROACH
[A] Creditworthiness of Indemnitor
[B] Collectability
[C] Contractual Ambiguities
[D] Adversarial Context of Claim
[E] Mechanical Issues Complicating Operation of Indemnity
[1] Interaction with Other Items
[2] Control of Controversy
[F] Effect of Equity and Public Policy
[1] Measurement of Damages
[2] Statute of Limitations
§3.05 OVERALL DRAFTING APPROACH
[A] Public Deal Versus Typical Private Deal
[B] Reliance on Representations and Warranties Without Indemnity
[C] Acquisition of Solely Assets Versus Fiscally Transparent Entity Versus Corporation
[D] Stand-Alone Tax Indemnity Section
[E] Tax Representations That Rely on Non-tax Indemnity Provisions
§3.06 INTERACTION WITH ECONOMIC DEAL AND FINANCIAL STATEMENTS
[A] General
[B] Financial Accounts and Tax Reserves
[C] Closing Date Statements and Working Capital Adjustment Versus Locked Box Approach
§3.07 MANNER OF DEALING WITH PARTICULAR TAXES
[A] Definition of Indemnified Taxes
[B] State/Province/Local Taxes
[C] Foreign Taxes
[D] Indirect Taxes
[E] Withholding Taxes
[F] Payroll Taxes and Employee Plans
[1] Payroll and Other Employment-Related Taxes
[2] Allocation of Assets and Liabilities
[3] Qualified Plan Compliance and Fiduciary Liabilities
[4] Pension Underfunding
[5] Government-Sponsored Pension Insurance
[G] Liability for Group Taxes
[H] Cross-Border Regimes
[I] Real Property Regimes
[J] Contractual Liability under Indemnity Given by Target
§3.08 BENEFIT OF PREEXISTING TAX ASSETS
[A] Refunds of Target Taxes
[B] Other Tax Assets
§3.09 COLLATERAL ISSUES
[A] Apportionment of Taxes During Stub Period
[B] Allocation of Purchase Price
[C] Transaction Tax Benefits
[D] Timing of Payment of Indemnity
[E] Tax Treatment of Indemnity Payment and Adjustment for Net Tax Benefit
[F] Planning for Possibility of Post-Sale Bankruptcy of Indemnitee, Target, or Indemnitor
[G] Elections
[H] Presale Structuring
[I] Seller Restrictions on Post-Transactional Behavior
[J] Agreement on Characterization of Transaction/Tax-Free Transactions
[K] Withholding Obligation of Purchaser
[L] Carryback of Post-Closing NOL
§3.10 MATTERS OF PROCEDURAL NATURE
[A] Payment of Current Taxes
[B] Preparation of Tax Returns/Right of Review
[C] Termination of Group Tax-Sharing Arrangements
[D] Control of Contest
[E] Competent Authority Proceedings
[F] Cooperation/Access to Personnel/Record Retention
[G] Survival (Expiration) of Representations and/or Indemnity
[H] Resolution of Disputes Regarding Tax Indemnities
§3.11 VARIATIONS IN DEMERGER CONTEXT
§3.12 CREDIT AGREEMENTS, LICENSE AGREEMENTS
Chapter 4 European Union
§4.01 TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION AND THE FREEDOMS
[A] Introduction
[B] The Operation of the Freedoms
[1] Prohibition of Discrimination on the Grounds of Nationality: Principle of Equal Treatment
[2] Limitation or Discouragement of the Freedom
[3] Engagement of Right
[C] Freedom of Establishment
[1] Primary and Secondary Freedom of Establishment
[2] Companies: No Primary Freedom of Establishment
[3] Permanent Establishment
[a] Permanent Establishment and Corporation Tax
[b] Acquisition of Permanent Establishment
[c] Permanent Establishment and Anti-abuse
[4] Controlled Foreign Companies: Cadbury Schweppes
[5] Group Relief: Marks & Spencer UK
[6] Thin Capitalization
[7] Accounting Rules
[D] Free Movement of Capital
[1] Main Articles
[2] Permissible Restrictions
[3] Investment Abroad
[4] Dividends
[E] TFEU and Double Tax Treaties
[1] The TFEU Overrides Double Tax Treaties
[2] Limitations
[a] Treaties Authorizing Discrimination
[b] Treaties Neutralizing Discrimination
[3] Most-Favored Nation
§4.02 EU DIRECTIVES
[A] Parent/Subsidiary Directive
[B] Cross-Border Mergers Directive
[C] Interest and Royalties Directive
[D] VAT
[1] Introduction
[2] Direct Effect of VAT Directives
[3] Directive 2008/9/EC: Refunds of VAT to Persons in Other EU Countries
[E] Common Consolidated Corporate Tax Base
[F] EU State Aid
[G] EU Anti-tax Avoidance Measures
[1] Anti-tax Avoidance Directive
[2] Tax Treaties Recommendation
[3] Country-by-Country Reporting
[4] Cross-Border Arrangements
[5] Recent Developments
Chapter 5 Joint Ventures
§5.01 INTRODUCTION
[A] General
[B] Due Diligence
§5.02 OVERALL STRUCTURE
[A] Entity or Not
[B] Legal Form and Jurisdiction of JV Entity
[C] Substructure
§5.03 ASSET AND LIABILITY TRANSFERS TO ENTITY, FINANCING
[A] General
[B] Contributions of Assets and Assumption of Liabilities
[C] Sale or Disguised Sale of Assets and Distributions Connected to Contributions
[D] License or Lease of Assets
[E] Financing of JV
§5.04 PERSONNEL AND COMPENSATION MATTERS
[A] Transfer of Personnel to JV
[B] Equity Compensation of JV Personnel
[C] Service Arrangement Between Venturer and JV
§5.05 TAX-OPTIMIZED STRUCTURE OF JV FUNCTIONS
§5.06 TAX TREATMENT OF OPERATIONS
[A] Profit and Loss
[1] Corporate JV
[2] Partnership JV
[B] Distributions
[1] Corporate JV
[2] Partnership JV
[C] Double Tax Relief
§5.07 TRANSFERS OF JV INTERESTS
§5.08 EXIT
[A] Transfer of JV Interest to Co-Venturer
[B] Redemption (Retraction) of JV Interest
[C] Windup of Venture
[D] Initial Public Offering
Chapter 6 Business Restructurings
§6.01 INTRODUCTION
[A] Definition and Background
[B] Overview of Typical Business Restructurings
§6.02 APPROACHES TO THE EXIT TAX PROBLEM
[A] Overview of Exit Tax Issues
[B] OECD Guidance: The TPG
[1] Chapter VI
[2] Chapter IX
[C] US Guidance
[1] Transfer Pricing Regulations Relating to Intangibles
[2] Valuation of IP: Contentious Issues Affecting Business Restructurings
[3] Rules for Outbound Asset Transfers
[D] German Business Restructuring Rules
[E] Economic Nexus: UK and Australian Diverted Profits Tax Regimes and Australian Multinational Anti-avoidance Law
[1] UK Actions
[2] Australian Actions
§6.03 RESTRUCTURING FOR CENTRALIZED OWNERSHIP OF IP/INTANGIBLES
[A] Selection of IP Company
[B] Cross-Border Transfer of IP Generally
[C] Migration/Development of IP
[D] Licensing Issues Including Withholding Tax
§6.04 RESTRUCTURING OF MANUFACTURING OPERATIONS
[A] Identification of Functions, Assets and Risks That Are Moved or Affected
[B] Potential Up-Front Exit Tax/Pricing of Property Transferred
[C] Pricing of Post-Restructuring Controlled Transactions
[D] PE Issues
[E] Special Issues for US-Headed Companies
§6.05 RESTRUCTURING OF DISTRIBUTION (SALES) OPERATIONS
[A] Identification of Functions, Assets and Risks That Are Moved or Affected
[B] Potential Up-Front Exit Tax/Pricing of Property Transferred
[C] Pricing of Post-Restructuring Transactions
[D] PE Issues
[E] Ownership of Marketing IP
[F] Special Issues for a US-Headed Group
Chapter 7 Corporate Redomiciliations
§7.01 INTRODUCTION
[A] General
[B] Reasons for Redomiciliation
§7.02 ISSUES FACED IN CONSIDERING REDOMICILIATION
[A] Commercial Issues
[B] Tax Issues
[1] Exit Taxes on Corporation and/or Shareholders
[2] US Anti-inversion Statute (IRC Section 7874)
[3] Other Tax Issues
[C] Manner of Effecting Redomiciliation
§7.03 THE PILLAR TWO GLOBE RULES AND REDOMICILIATIONS
[A] Background
[B] An Outline of the GloBE Rules
[1] Operation of the IIR
[2] Qualified UTPR
[3] Qualified Domestic Minimum Top-Up Tax
[4] Determining the ETR: Covered Taxes
[C] The UTPR and Redomiciliations
Part II Country Reports
Argentina
I Introduction
[A] Overview of M&A Activity
[B] General Legal System
[C] General Tax Environment
[1] Summary of Argentine Tax System
[2] Income Tax Accounting in the Financial Statements
[3] Adjustment for Inflation
[D] Types/Classification of Major Business Entities
[1] Legal Classification
[2] Income Tax Classification
[E] Characteristics Unique to Argentina
[1] Foreign Exchange Regulations
[2] Directors Responsibility
[a] Tax Responsibility
[b] Other Sources of Director Responsibility
[c] Scope of Director Liability
II Taxable Acquisitions and Dispositions
[A] Sale and Purchase of Shares
[1] Consequence for Selling Stockholders
[2] Indirect Sale of Assets Located in Argentina
[3] Consequences for the Acquiror
[4] Consequence for the Target (Argentine Company)
[5] Publicly Held Target Versus Privately Held Target
[B] Sale and Purchase of Assets
[1] Legal Issues: Transfer of a Going Concern
[2] Consequences for the Seller
[a] General
[b] Recognition of Income
[c] Roll Over
[3] Consequences for the Buyer
[4] Payment of Purchase Price
[5] Compliance
[C] Treatment of Contingent Purchase Price/Contingent Liabilities
[D] Allocation of Purchase Price
[E] VAT and Other Transfer Taxes
[1] Stock Transfer
[a] Value-Added Tax
[b] Tax on Minimum Presumed Income
[c] Personal Assets Tax
[d] Tax on Debits and Credits on Bank Accounts
[e] Turnover Tax
[f] Stamp Tax
[2] Asset Transfer
[a] Value-Added Tax
[b] Reimbursement of VAT
[c] Tax on Debits and Credits in Bank Accounts
[d] Turnover Tax
[e] Stamp Tax
III Tax-Free Acquisitions and Dispositions
[A] Types and Requirements
[1] Capital Requirement
[a] Merger
[b] Spin-Off
[c] Sales and Transfers Between Entities of the Same Economic Group
[2] Maintenance of Capital
[3] Continuity of Activity
[4] Report to Tax Authority
[5] Publication and Registration Formalities
[6] Active Entities
[7] Same or Related Activities
[a] Passive and Active Income
[b] Holding Activity
[8] Requirement for the Transfer of Accumulated Tax Losses
[a] Interpretation of the 80% Requirement
[b] Entities That Must Fulfill This Requirement
[c] Transfer of Shares Between Entities of the Same Economic Group
[d] Transfer of Shares to a Guarantee Trust
[B] Issues Regarding the Sale and Transfer of Assets Between Entities That Belong to the Same Economic Group
[1] Additional Requirements
[2] Obligation to Comply with the "Same or Related Activities" Requirement in the Case of a Merger of Entities That Belong to the Same Economic Group
[a] The Tax Authority's Position
[b] The Tax Court's Position
[c] The Court of Appeal's Position
[d] The Supreme Court Position
[C] General Consequences and Objectives
[D] Cross-Border Transfers
[E] Compliance
[F] Real Property Holding Company
[G] Transfer Taxes
[1] Value-Added Tax
[2] Tax on Minimum Presumed Income
[3] Stamp Tax
[4] Turnover Tax
[H] Issues of Special Concern in Argentina
IV Attribute Preservation and Usage
[A] Change in Ownership Impact on Tax Assets
[B] Relaxed Rules Arising from Financial Crisis
[1] 2001 Financial Crisis
[C] Allocation of Compensation and Other Deductions Between Pre- and Post-closing Periods
[D] Any Other Issues of Special Concern in Argentina
V Due Diligence and Contractual Tax Protection
[A] Due Diligence
[B] Tax Indemnification and Other Contractual Provisions
VI Financing and Debt Pushdown Strategies
[A] Leveraging the Taxable Acquisition, Including Cross-Border Aspects
[1] Interest Payments Withholding Rates
[2] Taxation of Fees in Loan Agreements
[3] Preferential Tax Regime
[4] Foreign Exchange Gains and Losses
[5] Preferred Shares
[6] Arm's Length Interest Rate
[B] Thin Capitalization Rules
[C] Tax Treaty Usage
[D] Debt Pushdown Strategies
VII Dealing with Compensation Plans
[A] Treatment and Issues in M&A Context
[B] Any Other Issues of Special Concern in Argentina
VIII Grouping
[A] Consolidation for Tax Purposes
[B] Departure of Group Member
IX Planning with Intangibles
[A] Local Regime
[B] Any Other Issues of Special Concern in Argentina
X Internal Restructuring Involving Argentine Target
XI Target Breakup or Other Disposition of Unwanted Assets
XII Demergers
[A] Domestic Treatment and Issues
[B] Cross-Border Treatment and Issues
[C] Any Other Issues of Special Concern in Argentina
XIII Subsidiary Liquidations
[A] Domestic Treatment and Issues
[B] Cross-Border Treatment and Issues
[C] Any Other Issues of Special Concern in Argentina
XIV Joint Ventures
[A] Structuring, Treatment and Issues in Cross-Border Context
[B] Any Other Issues of Special Concern in Argentina
XV Equity and Debt Restructuring
[A] Debt Modifications
[1] Introduction
[2] Waiver of Principal or Interest Due
[3] Payments Deferrals
[4] Conversion of Debt in Equity
[5] Restructuring of Negotiable Obligations
[B] Equity Modifications
[1] Capital Contribution
[2] Issuance of Shares at Premium
[3] Capital Reduction
[C] Any Other Issues of Special Concern in Argentina
[1] Reorganization Proceedings
[2] Bad Debts
XVI Corporate Expatriations
XVII Business Restructuring
XVIII Argentine Corporation as Acquisition Vehicle for Foreign Target
[A] Taxation of Foreign Entities
[B] Double Tax Relief System
[C] Financing the Acquisition
Australia
I Introduction
[A] General Tax Environment
[B] Types/Classification of Major Business Entities
[C] Business Trusts in Australia
[1] Public Trading Trusts: Div 6C Trusts
[2] MIT Regime
[D] Calculation and Payment of Tax
[1] Taxable Income
[2] Income Year
[3] Tax Returns and Payments
[4] GST
II Taxable Acquisitions and Dispositions
[A] Sale and Purchase of Shares
[1] Consequences for Selling Shareholders
[2] Consequences for Acquirer
[3] Sale or Acquisition of Shares by a Consolidated Group
[a] Tax Cost Setting of the Target's Assets on Acquisition
[b] Acquisition from a Consolidated Group
[4] Goods and Services Tax
[B] Taxable Acquisition/Disposition of Australian Entities Assets
[1] Trading Stock
[2] Depreciating Assets
[3] Capital Assets
[4] Revenue Assets
[5] Liabilities
[6] Consequences for Seller
[7] Consequences of Asset Sale to Buyer
[8] Indemnification Payments by Seller
[9] Special Consideration for Asset Sales Between Related Corporations
[a] Companies That Are Subsidiary Members of a Tax-Consolidated Group
[b] Non-resident Companies in a Wholly Owned Group
[c] Related Companies in Other Circumstances
[C] Sale and Purchase of Partnership Interests
[1] Flow-Through Partnerships
[2] Partnerships Taxed as Companies
[3] Foreign Hybrid Partnerships
[4] Venture Capital Partnerships
[D] Instalment Sales
[E] Treatment of Contingent Purchase Price/Contingent Liabilities, Earn-Outs and Escrows
[1] 'Standard' Earn-Out
[2] 'Reverse' Earn-Outs
[F] Non-resident Sellers
[1] Residence of Companies
[2] Source of Income in Australia
[3] Capital Gains of Non-residents
[G] Goods and Services Tax
III Tax-Free Acquisitions and Dispositions
[A] Tax-Free Disposals of Shares: Scrip-for-Scrip Exchanges
[1] Scrip-for-Scrip Rollover for Interests in Companies
[a] Exchange of Shares
[b] The 'Single Arrangement' Requirement
[c] Eighty Per Cent Ownership Requirement
[d] All Voting Share Owners Are Able to Participate
[e] Participation Is on Substantially the Same Terms
[f] The Replacement Share Requirement
[2] Choice of Rollover
[3] Additional Requirements for Certain Non-arm's Length Dealings
[4] Scrip-for-Scrip Rollover Exchange of Trust Interests
[5] Exceptions and Limitations to Obtaining Scrip-for-Scrip Rollover
[a] Foreign Residents
[b] A Capital Gain Cannot Be Otherwise Disregarded
[c] Not Part of the Same Wholly Owned Group
[d] Rollover Is Not Available under Other Rollover Provisions
[6] Effect of Choosing Scrip-for-Scrip Rollover
[a] Consequences for Original Interest Holders in the Target
[b] Consequences for the Bidder
[B] Cross-Border Transfer
[C] Incorporation Rollover
[D] Insertion of an Interposed Company
[E] Application of General Anti-avoidance Rules to M&A Activity
[1] Outline of Operation of General Anti-avoidance Rule
[2] Application in the M&A Context
[3] Permanent Establishment Anti-avoidance
[4] Diverted Profits Tax
IV Attribute Preservation and Usage
[A] Tax-Loss Preservation and Usage
[1] Overview of Company Loss Rules
[2] Continuity of Ownership Test
[3] Same Business Test
[4] Similar Business Test
[5] Unrealized Tax Losses
[6] Inter-entity Loss Duplication Rules
[7] Trust Losses
[8] Losses of Australian Branch of Foreign Bank
[B] Imputation Tax Credits
[1] The Company Imputation System
[2] Streaming and Trading in Imputation Credits
[C] Pre-CGT Status of Assets
[D] Other Tax Attributes
[E] Other Issues of Special Concern in Australia
[1] Transfer of Losses to a Tax-Consolidated Group
[a] Bringing Losses into the Consolidated Group
[b] Utilization of Transferred Losses by the Head Company
[c] Other Loss Rules
[2] Imputation Credits
[3] Pre-CGT Status of Assets
[4] Other Tax Attributes
V Due Diligence and Contractual Tax Protection
[A] Tax Consolidation
[1] Tax Liabilities
[2] Tax Attributes
[B] Other Tax Issues
[1] Recapture of Deferred Gains and Losses
[2] GST
VI Financing and Debt Push-Down Strategies
[A] Debt and Equity Classification
[1] Debt Interests
[2] Equity Interests
[3] Examples
[B] Interest Deductibility
[1] General Rules Limiting Interest Deductions
[2] Rules Permitting Deduction of Financing Costs That Would Not Be Deductible under General Principles
[3] Thin Capitalization Rules
[4] Arm's-Length Interest Rate
[5] Hybrid Mismatch Rules
[6] Pillar One and Pillar Two Rules
[C] Australian Withholding Tax
[1] Dividend Withholding Tax
[2] Interest Withholding Tax
[3] Dividends Versus Interest Paid to Non-residents
VII Dealing with Compensation Plans
[A] Tax Issues for Employees
[1] Overview
[2] When Is Deferred Taxation Available?
[3] AUD 1,000 Exemption
[4] M&A Considerations
[B] Tax Issues for the Employer
[1] Fringe Benefits Tax
[2] Deductions
[3] Reporting and Withholding Obligations
VIII Grouping
[A] Group Membership Requirements
[1] Multiple Entry Consolidated Groups
[B] Single Entity Rule
[C] Tax Cost Setting of Assets on Joining Consolidated Group
[D] Leaving the Consolidated Group
IX Planning with Intangibles
[A] R&D Tax Credits
[B] Transfers of IP Out of Australia
[C] Transfer Pricing
[D] CFC Rules
X Internal Restructuring Involving Australian Target
[A] Australian Parent
[1] Consolidation
[2] Imputation
[B] Foreign Parent
XI Target Breakup or Other Dispositions of Unwanted Assets
[A] Australian Parent
[B] Foreign Parent
[C] Demerger Rules
XII Demergers
[A] CGT Requirements of a Demerger
[1] Condition 1: Ownership Interest
[2] Condition 2: Interest in the Head Entity of a Demerger Group
[3] Condition 3: Demerger Happens to Demerger Group?
[a] Restructuring of a Demerger Group
[b] Demerger of 80% of Interests
[c] Nothing Else Acquired
[d] Interest Acquired Because of Ownership of Original Interests
[e] Like for Like Interest
[f] Same Ownership Proportion
[g] Same Market Value
[h] Coordination with Other Regimes
[4] Condition 4: CGT Event
[B] CGT Consequences of the Demerger
[C] Dividend Relief
[D] Integrity Provision: Section 45B
[1] Consequences of Section 45B Applying
XIII Subsidiary Liquidations
[A] Liquidation Outside a Tax-Consolidated Group
[1] Capital Gains and Losses
[2] Deemed Dividend for Distribution of Retained Profits
[3] Australian Company Liquidates into Foreign Parent
[4] Foreign Subsidiary Liquidates into Australian Parent
[B] Liquidation Within a Tax-Consolidated Group
XIV Joint Ventures
[A] Unincorporated Joint Ventures
[1] Income Tax
[2] GST
[B] Incorporated Joint Ventures
XV Equity and Debt Restructuring
[A] Share Buy-Backs
[1] Participating Shareholder's Perspective
[a] Split Between the Capital Component and Dividend Component
[b] Market Value
[c] Dividend Component
[d] Capital Component
[2] Company's Perspective
[3] Anti-avoidance Rules
[a] Forty-Five-Day Rule
[b] Section 204-30
[c] Section 177EA
[d] Section 45A
[e] Section 45B
[f] Subsection 6(4)
[B] Debt Forgiveness
[1] Lender/Creditor
[a] Revenue Account
[b] Capital Account
[c] Non-resident Lender
[d] Subdivision 165-CD
[e] Direct Value Shifting
[2] Borrower/Debtor
[a] Debt Forgiveness as Ordinary Income
[b] Capital Gains Tax
[c] Commercial Debt Forgiveness Provisions
[C] Debt for Equity Swap
[1] Lender/Creditor
[a] Sections 63E and 63F
[b] Direct Value Shifting
[c] Market Value Substitution Rule
[d] Exchangeable Interests
[2] Borrower/Debtor
[a] Commercial Debt Forgiveness Provisions: Debt for Equity Swap
[b] Same Share Test and Saving Test
[c] Share Capital Tainting
XVI Corporate Expatriations
[A] Change of Corporate Residence
[B] Dual Residents
[1] Expatriation Using Tax Treaty Tiebreakers
[2] Domestic Rules Dealing with Dual Residents
[C] Limitations on Rollovers
[D] Redomiciling Australian Companies
[E] Dual-Listed Companies
XVII Business Restructurings
XVIII Australian Corporation as Acquisition Vehicle for Foreign Businesses
[A] Incoming Dividends
[B] Sale of Shares
[C] Australian Company with a Foreign Branch
[D] Deductibility of Funding Costs
[E] Controlled Foreign Company Regime
[1] Control Test
[2] Attribution of Income
[3] Disposal of Shares in a CFC
[F] Disregarded Entities
[G] Conduit Relief
[H] Foreign Income Tax Offset (Credit) Regime
Belgium
I Introduction
[A] General Legal System
[B] General Tax Environment
[C] Characteristics Unique to Belgium
[1] Mechanics of Typical Acquisition
[2] Double Tax Relief System
[a] Treaty Countries
[b] Non-treaty Countries
[3] Controlled Foreign Corporation Regime
II Taxable Acquisitions and Dispositions
[A] Sale and Purchase of Shares: Holding Company Structure
[1] Asset Deal
[2] Share Deal
[a] Introduction
[b] Holding Company Regime
[i] Introduction
[ii] Corporate Income Tax
[iii] Withholding Tax
[iv] Capital Duty
[v] VAT
[3] Parent as Target Entity: Consequences to Transferor, Transferee and Target
[a] Publicly Held Target
[i] Notion of 'Publicly Held Target'
[ii] Procedures and Disclosures
[b] Privately Held Target
[i] Part Share Purchase, Part Share Redemption
[4] Real Property Holding Companies
[5] Purchase Price Pushdown (Asset Basis Step-Up)
[6] Subsidiary of Domestic Entity as Target Entity: Consequences to Transferor, Transferee and Target
[a] To the Transferor
[i] Default Rule
[ii] Exceptions
[b] To the Transferee
[c] To the Target
[B] Sale and Purchase of Assets
[1] Consequences for Transferor
[2] Consequences for Transferee
[3] Treatment of Contingent Purchase Price/Contingent Liabilities
[4] Allocation of Purchase Price
[5] VAT and Other Transfer Taxes
[a] Value-Added Tax
[b] Registration Taxes
[c] IFRS Considerations
[d] Compliance
[i] Regulatory Requirement
[ii] Corporate Law Requirement
[iii] Tax Notifications and Disclosures
[iv] Exceptions
[e] Belgian Merger Control Regime
[i] Introduction
[ii] Definition of a Concentration
[iii] Requirement of Prior Notification and Payment of the Filing Fee
[iv] Gun Jumping Rules
[v] Procedure
[vi] Rights of Appeal
III Tax-Free Acquisitions and Dispositions
[A] Types and Requirements
[1] Share Deals
[2] Asset Deals
[B] General Consequences and Objectives
[1] Share Deals
[2] Asset Deals
[a] Company Law
[b] Tax Law
[i] Conditions for the Rollover Regime to Apply
[ii] Consequences of the Rollover Regime
[C] Cross-Border Transfers
[1] Share Deals
[2] Asset Deals
[D] Transfer Taxes
[1] Share Deal
[2] Asset Deal
[E] Issues of Special Concern in Belgium
[1] IFRS Considerations
[2] EU Considerations
[3] Planning Strategies for Particular Situations
[a] Real Property Holding Companies
[b] Long-Term Investment Funds
[c] Compliance
IV Attribute Preservation and Usage
[A] Change in Ownership Impact on Tax Assets
[B] Allocation of Compensation and Other Deductions Between Pre-and Post-closing Periods
[C] Other Issues of Special Concern in Belgium
V Due Diligence and Contractual Tax Protection
[A] Due Diligence
[1] Cross-Reference
[2] Issues Unique to the Country
[a] False Independent Contractors
[b] Payments to Undisclosed Beneficiaries
[c] Retained Earnings Converted to Share Capital
[B] Tax Indemnification and Other Contractual Provisions
VI Financing and Debt Pushdown Strategies
[A] Leveraging the Taxable Acquisition, Including Cross-Border Aspects
[1] Thin-Cap Rules
[a] Interest Payments Subject to the 5:1 Thin Capitalization Rule: Article 198, Section 1, 11º ITC
[b] Dividend Requalification Rule: Article 18, 4° ITC
[c] Interest Payments Subject to the 30% EBITDA Rule
[d] Payments Made to Low Taxed Persons or Entities: Article 307, § 1, (3) Through (5) ITC
[2] FX Considerations
[3] Tax Treaty Usage
[B] Debt Pushdown Strategies
[1] Tax Consolidation
[2] Alternative Debt Pushdown Strategies
[a] Merger Between Acquico and Target
[b] Target Borrows to Distribute Retained Earnings and Share Capital to Acquico
[i] Article 49 ITC
[ii] Financial Assistance
[iii] Re-characterization of Sales Proceeds as Dividend Distribution
[iv] Dividend Withholding Tax
[c] Use BelCo as Leveraged Holding Company
VII Dealing with Compensation Plans
[A] Treatment and Issues in M&A Context
[B] Any Other Issues of Special Concern in Belgium
[1] CAB No. 32 bis: Scope of Application
[2] Consequences of the Transfer for the Individual Employment Contracts
[a] Automatic Transfer of the Employment Relationship
[b] Prohibition to Dismiss
[3] The Duty to Inform and Consult the Employees' Representatives in the Works Council Prior to the Transfer
[a] Information and Consultation Procedure
[b] Timing of the Information and Consultation Procedure
[4] Stock Option Plans
VIII Grouping
IX Planning with Intangibles
[A] Local Regime (If Favourable)
[B] Treatment of Transfers Offshore and Licensing Back (If Local Regime Is Unfavourable)
[C] Other Issues of Special Concern in Belgium
[1] Tax Treaty Usage
[2] Migration Generally
X Internal Restructuring Involving Belgium Target
[A] Types of Company Amalgamations: Overview
[B] Merger
[1] Merger by Acquisition
[2] Merger by Incorporation
[3] Transaction Equivalent with a Merger by Acquisition
[C] Tax Neutrality of a Merger
[1] Conditions for a Tax-Neutral Merger
[a] Merger as Defined by Tax Law
[b] Surviving Company
[c] Anti-abuse Test
[2] Effect of a Tax-Neutral Merger
[a] Retroactivity of a Merger
[b] No Tax on Capital Gains
[c] Transfer of Secondary Tax Attributes
[d] Transfer of NOLs and Excess DRD
[e] Parent-Subsidiary Merger
[f] Boot Payment
[3] Additional Conditions to Be Satisfied in and Effect of a Cross-Border Merger
[a] Belgian Establishment
[b] Booked as Untaxed Reserves
[c] Not Transferred
[d] Transfer of NOLs
[e] Special Rules
[D] Contribution of Assets
[E] Sale of Assets
[F] Other Aspects
[1] Recapture of Losses Claimed
[2] Taxation of Capital Gains upon Contribution in Kind of Intangibles by Individual Taxpayer
XI Target Breakup or Other Disposition of Unwanted Assets
[A] Strategies
[1] Direct Disposition
[2] Indirect Disposition
XII Demergers
[A] Domestic Treatment and Issues
[1] Requirements for Tax-Free Status Generally
[2] Planning Techniques
[B] Cross-Border Issues
[C] Other Issues of Special Concern in Belgium
XIII Subsidiary Liquidations
[A] Domestic Treatment and Issues
[B] Cross-Border Treatment and Issues
[1] Belgian Parent Company Survives: Foreign Subsidiary Company Liquidated
[2] Foreign Parent Company Survives: Belgian Subsidiary Company Liquidated
XIV Joint Ventures
[A] Tax Transparent Vehicles
[1] The Interest Groupings
[a] Legal Aspects
[i] Introduction
[ii] Transparent and No Core Business
[iii] Constitutive Documents
[iv] Registration
[b] Accounting Rules
[c] Tax Aspects
[i] Direct Tax Aspects
[ii] Value-Added Tax
[iii] Registration Tax
[2] The Temporary Association/Temporary Partnership
[a] Legal Aspects
[b] Tax Aspects
[B] Non-transparent Vehicles
XV Equity and Debt Restructuring
[A] Debt Modifications
[1] Subordination of Existing Debt
[2] Conversion of Debt to Equity
[3] Forgiveness or Waiver of Debt
[B] Equity Modifications (Recapitalizations)
[C] Any Other Issues of Special Concern in Belgium: Share Buy-Backs
XVI Corporate Expatriations
[A] Motivating Factors
[B] Exit Costs
[C] Immigration
XVII Belgium Corporation as Acquisition Vehicle for Foreign Target
Brazil
I Introduction
[A] General Tax Environment
[B] Current Trends
II Taxable Acquisitions and Dispositions
[A] Sale and Purchase of Shares
[B] Sale and Purchase of Assets
[C] Treatment of Contingent Purchase Price/Contingent Liabilities
[D] Allocation of Purchase Price
[1] Old Rules: Acquisitions Until December 31, 2014
[2] New Regime
[E] VAT and Other Transfer Taxes
III Tax-Free Acquisitions and Dispositions
[A] Types and Requirements
[1] Merger Transactions
[2] Share Swap Transaction
[3] Private Equity Fund (FIP)
[B] Cross-Border Transfers
[C] Transfer Taxes
IV Attribute Preservation and Usage
V Due Diligence and Contractual Tax Protection
[A] Due Diligence
[B] Tax Indemnification and Other Contractual Provisions
VI Financing and Debt Pushdown Strategies
VII Dealing with Compensation Plans
[A] Treatment and Issues in M&A Context
[1] Profit Sharing Plan
[2] Stock Option Plans
VIII Grouping
IX Planning with Intangibles
X Internal Restructuring Involving Brazilian Target
XI Target Breakup or Other Disposition of Unwanted Assets
XII Demergers
[A] Domestic Treatment and Issues
[B] Cross-Border Treatment and Issues
XIII Subsidiary Liquidations
[A] Domestic Treatment and Issues
[B] Cross-Border Treatment and Issues
XIV Joint Ventures
[A] Structuring, Treatment and Issues in Cross-Border Context
XV Equity and Debt Restructuring
[A] Debt Modifications
[B] Equity Modifications
XVI Corporate Expatriations/Redomiciliations
XVII Business Restructurings
XVIII Brazilian Corporation as Acquisition Vehicle for Foreign Target
[A] Old Regime (Profits Until December 31, 2014)
[B] New Regime (Profits as of January 1, 2014)
Canada
I Introduction
[A] Overview of Canada
[B] General Legal System
[C] General Tax Environment
[1] Anti-avoidance Rules
[a] General Anti-Avoidance Rule (GAAR)
[b] Rule Implementing Country-by-Country Reporting
[i] Multilateral Instrument (MLI)
[c] Transfer Pricing Measures
[i] Order of Application of the Transfer Pricing Rules
[ii] Applicable Reassessment Period
[D] Types/Classification of Major Business Entities
II Taxable Acquisitions and Dispositions
[A] Sale and Purchase of Shares
[1] Consequences for Selling Shareholders
[i] CAD 866,912 Lifetime Capital Gains Exemption (Indexed Annually to Inflation)
[ii] Capital Dividends
[iii] Capital Gains Stripping: Safe Income Dividends
[iv] Capital Gains Reserve
[2] Non-residents of Canada
[i] Application of Tax Treaties
[ii] Section 116 Clearance Certificates
[iii] Canadian Tax Return Filing Requirements
[3] Consequences for Acquiror
[4] Consequences for Target
[B] Sale and Purchase of Assets
[1] General
[2] Consequences for Seller
[3] Consequences for Acquiror
[C] Sale and Purchase of Partnership Interests
[D] Treatment of Contingent Purchase Price/Contingent Liabilities
[1] Treatment of Contingent Purchase Price
[2] Treatment of Contingent Liabilities
[E] Allocation of Purchase Price
[F] VAT and Other Transfer Taxes
III Tax-Free Acquisitions and Dispositions
[A] Types and Requirements
[1] Tax-Deferred Rollovers Involving Canadian Corporations
[a] Subsection 85(1) Transfer of Property to Corporation by Shareholders
[i] Transferor-Level Consequences
[ii] Transferee-Level Consequences
[b] Section 86 Reorganization
[i] Shareholder-Level Consequences
[ii] Corporate-Level Consequences
[c] Section 51 Convertible Property
[i] Shareholder-Level Consequences
[ii] Corporate-Level Consequences
[d] Section 85.1 Share-for-Share Exchange
[i] Shareholder-Level Consequences
[ii] Acquiror-Level Consequences
[iii] Corporate-Level Consequences
[e] Section 87 Amalgamation
[i] Triangular Amalgamations
[f] Subsection 88(1) Wind-Up
[2] Tax-Deferred Rollovers Involving Canadian Partnerships
[a] Subsection 97(2) Transfer of Property to a Partnership
[i] Transferor-Level Tax Consequences
[ii] Partnership-Level Tax Consequences
[b] Subsection 85(2) Transfer of Property from Partnership to Corporation
[c] Wind-Up of Partnership
[i] Subsection 98(3) Transfer of Property to Partners
[ii] Subsection 85(3) Transfer of Property to Corporation
[iii] Subsection 98(5) Transfer of Property to Sole Proprietorship
[3] Tax-Deferred Rollovers Involving Non-Canadian Corporations
[a] Subsection 85.1(5) Foreign Share for Foreign Share Exchange
[b] Section 86.1 Foreign Spin-Offs
[4] Exchangeable Share Transactions
[B] Cross-Border Transfers
[1] Dispositions by Non-residents of Canada
[C] Transfer Taxes
[D] Issues of Special Concern in Canada
[1] Treatment of Warrants on Tax-Deferred Transactions
IV Attribute Preservation and Usage
[A] Change of Ownership Impact on Tax Assets
[1] Deemed Year-End
[2] Restrictions on Loss Utilization
[3] Asset Write-Downs
[4] Election to Offset Losses
[5] Additional Considerations
V Due Diligence and Contractual Tax Protection
[A] Due Diligence
[B] Tax Indemnification and Other Contractual Provisions
[1] Tax Indemnification: Share Purchase
[2] Restrictive Covenants (E.g., Non-compete Clauses)
VI Financing and Debt Pushdown Strategies
[A] Leveraging the Taxable Acquisition, Including Cross-Border Aspects
[1] Maximizing Treaty Benefits in Order to Minimize Canadian Tax
[a] Dividends: Generally
[b] Avoiding Canadian Capital Gains Tax on a Sale of Shares
[c] Partnerships
[2] Choice of Entity in Canada
[a] Branch Versus Subsidiary
[i] Canadian Subsidiary-Detailed Considerations
[ii] Canadian Branch-Detailed Considerations
[b] Unlimited Liability Corporations
[c] Partnerships
[3] Financing Considerations
[a] Advantages of Debt Financing
[b] Canadian Tax Issues Relevant to Interest Deductibility
[i] General Considerations
[ii] Section 78 Issues
[iii] Thin Capitalization Rule
[c] Where to Borrow
[d] Guarantees
[i] Downstream Guarantees by Foreign Shareholder
[ii] Upstream Guarantees by Canadian Corporations
[4] Royalty Payments for the Right to Use Technology
[5] Payment of Management Fees and Bonuses to Non-residents
[6] Distributions to Shareholders
[a] The Importance of Paid-Up Capital
[7] Inbound to Canada Hybrid Structuring
VII Dealing with Compensation Plans
[A] Treatment and Issues in M&A Context
[1] Tax-Deferred Rollover of Stock Options
[2] Cash-Out of Stock Options
[B] Any Other Issues of Special Concern in Canada
[1] DSU Plans
[2] RSU Plans
VIII Grouping
[A] Requirements
[B] Consequences and Advantages
[1] Loss Utilization Structures
[C] Departure of Group Member
IX Planning with Intangibles
[A] Local Regime (If Favourable)
[B] Treatment of Transfers Offshore and Licensing Back (If Local Regime Is Unfavourable)
X Internal Restructuring Involving Canadian Target
[A] Motivation for Restructuring
[B] Amount of Potential Bump
[C] Bump Denial Rules
[D] Examples of Bump Problems
[E] Typical Non-resident Acquisition Structure for Canadian Target
[1] Background Considerations
[F] Case Study: Restructuring Canadian Target and Sale of Unwanted Target Assets after Closing
[1] Assumed Facts
[2] Acquiror Structure
[3] Pre-acquisition Structure of Acquiror and Canholdco/Target (Post-Restructuring)
[4] Steps
[5] Post-Closing Structure
XI Target Break-Up or Other Dispositions of Unwanted Assets
[A] General Issues
[B] Strategies
[1] Transfer of High Basis Assets
[2] Instalment Sale
[3] Return of Capital Transactions
[a] Section 86 Share Exchange Spin-Out
[4] Replacement Property Rules
XII Demergers
[A] Domestic Treatment and Issues
[1] Related-Corporation Divisive Reorganization
[a] Assumptions
[b] Objective
[c] Steps
[2] Split-Up Reorganization
[a] Assumptions
[b] Objective
[c] Steps
[3] Spin-Off Reorganization
[a] Assumptions
[b] Objective
[c] Steps
XIII Subsidiary Liquidations
[A] Domestic Treatment and Issues
[1] Taxable Liquidation of a Canadian Corporation
[B] Cross-Border Treatment and Issues
[1] Canadian Company Liquidates into Foreign Parent
[2] FA Liquidates into Canadian Taxpayer
XIV Joint Ventures
[A] Structuring, Treatment and Issues in Cross-Border Context
XV Equity and Debt Restructuring
[A] Debt Modifications
[B] Equity Modifications
XVI Corporate Expatriations
XVII Business Restructurings
XVIII Canadian Corporation as Acquisition Vehicle for Foreign Target
[A] Introduction
[B] Key Concepts
[1] Foreign Affiliate
[2] Controlled Foreign Affiliate
[C] Income Characterization
[1] FAPI
[2] Investment Business
[3] Non-qualifying Business
[4] Income from an Active Business
[5] Subparagraph 95(2)(a)(i)
[6] Subparagraph 95(2)(a)(ii)
[a] Income from a Business Other Than an Active Business
[7] Foreign Currency-Related Issues
[D] Investments in an FA
[E] Distributions from an FA
[F] Surplus Accounts
[1] Exempt Surplus
[2] Hybrid Surplus
[3] Taxable Surplus
[4] Pre-acquisition Surplus
[5] Designated Treaty Country
[6] Timing and Ordering of Dividends
[G] Anti-avoidance Provisions
[1] Subsection 95(6)
[2] Deemed Dividend on 'Upstream Loans'
[3] Surplus Reclassification
[H] Disposition of Shares of an FA (Section 93)
[I] FA Reorganizations
[1] Disposition of FA Shares by a Canadian Taxpayer
[2] Disposition of FA Shares by Another FA
[3] Liquidation of FA into Canadian Taxpayer
[4] Liquidation of FA into Another FA
[5] Foreign Mergers
[J] US Tax Reform Eliminates Canadian Outbound Double-Dip Structures
XIX Recent Developments for the Energy Sector
People's Republic of China
I Introduction
[A] Overview
[B] General Legal System
[C] General Tax Environment
[1] Overall Tax Climate
[2] The Recent Tax Reforms in China
[a] Fundamental Tax Reform in 1994
[b] Second Round of Tax Reform Beginning in 2003
[c] Pilot VAT Reform Beginning in 2012
[3] Continuous Efforts of Statutorization
[4] Trends
[a] More Balanced and Organized
[b] Increasing Adoption of International Practices (with Chinese Characteristics)
[c] Strengthening of Tax Collection
[i] General Anti-Avoidance Rules
[ii] Transfer Pricing
II Taxable Acquisitions and Dispositions
[A] Treatment of Seller and of Target Entity
[1] General Rules on EIT Treatment
[2] Choice of Favorable Tax Treaties
[3] Anti-avoidance Challenges
[4] Requirements for Beneficial Ownership
[5] Examination of Indirect Transfers
[B] Sale and Purchase of Shares and Sale and Purchase of Assets
[1] Equity Acquisition: Consequences to Transferor, Transferee and Target
[a] Tax Consequences on Transferor
[i] EIT
[ii] Stamp Duty
[b] Tax Consequences on Transferee
[i] EIT
[ii] Stamp Duty
[c] Tax Consequences on Target
[2] Asset Acquisition: Consequences to Transferor and Transferee
[a] Tax Consequences on Transferor
[i] EIT
[ii] Value-Added Tax
[iii] UMCT and Educational Surcharges
[iv] Land VAT
[v] Stamp Duty
[vi] Claw Back of Customs Duty and Import VAT
[b] Tax Consequences on Transferee
[i] EIT
[ii] Stamp Duty
[iii] Deed Tax
[C] Allocation of Purchase Price
[D] VAT and Other Transfer Taxes
III Tax-Free Acquisitions and Dispositions
[A] Types and Requirements
[1] EIT Deferral Treatment on Enterprise Restructuring
[a] Tax-Free Restructuring Opportunities prior to 2008
[b] EIT Special Tax Treatment
[B] General Consequences and Objectives
[1] General Criteria for Special Tax Deferral Treatment
[a] Special EIT Deferral Treatment on Equity Acquisition
[b] Special EIT Deferral Treatment on Asset Acquisition
[c] Special EIT Deferral Treatment on Debt Restructuring
[d] Special EIT Deferral Treatment on Merger
[e] Special EIT Deferral Treatment on Demerger
[C] Cross-Border Transfers
[D] Transfer Taxes
[E] Issues of Special Concern in China
[1] Planning Strategies
[a] Offshore Holding Company Restructuring
[b] Treatment of Retained Earnings in Equity Transfer
[c] Merger as an Alternative to Sale
[2] Procedural and Compliance Considerations
IV Attribute Preservation and Usage
[A] Change in Ownership Impact on Tax Assets
[B] Allocation of Compensation and Other Deductions Between Pre- and Post-closing Periods
[C] Any Other Issues of Special Concern in China
V Due Diligence and Contractual Tax Protection
[A] Due Diligence
[B] Tax Indemnities
VI Dealing with Compensation Plans
VII Financing and Debt Pushdown Strategies
[A] Leveraging the Taxable Acquisition, Including Cross-Border Aspects
[B] Debt Pushdown Restrictions
[1] Registered Capital/Total Investment
[2] Arm's-Length Interest Rate
[3] Thin Capitalization
[4] Foreign Exchange Considerations
[a] Registration for Direct Investment
[b] Foreign Debt Registration
[5] Tax Treaties
VIII Grouping
IX Planning with Intangibles
[A] Local Regime (If Favorable)
[1] Use of Tax Treaties
[2] Cost Sharing
[3] Purchase Price Allocations of Asset Acquisitions Involving Intangibles
[B] Treatment of Transfers Offshore and Licensing Back (If Local Regime Is Unfavorable)
[C] Any Other Issues of Special Concern in China
X Internal Restructuring Involving PRC Target
XI Target Breakup or Other Disposition of Unwanted Assets
XII Demergers
[A] Domestic Treatment and Issues
[B] Cross-Border Treatment and Issues
[1] Tax Indemnification Provisions
[C] Any Other Issues of Special Concern in China
XIII Subsidiary Liquidations
XIV Joint Ventures
[A] Structuring, Treatment and Issues in Cross-Border Context
[1] Overview
[2] Capital Contributions on Formation
[3] Allocation and Taxation of Operation Results
[a] Nonlegal Person CJV
[b] Legal Person JVs
[4] Taxation of Distributions
[a] Allocation of After-Tax Profits
[b] Taxation on Distributions to Shareholders
[c] Double Tax Relief
[5] Exits/Unwind Scenarios
[a] Equity Transfer
[b] Liquidation of the JV
[B] Any Other Issues of Special Concern in China
[1] FIP Enterprises
XV Equity and Debt Restructuring
[A] Debt Modifications
[1] Consequences Generally
[a] Special Tax Treatment
[B] Equity Modifications
[1] Consequences Generally
[2] General Anti-tax Avoidance Rule
[C] Any Other Issues of Special Concern in China
XVI Corporate Expatriations/Redomiciliations
XVII Business Restructurings
[A] Domestic Entity as Acquisition Vehicle of Foreign Entity
[B] Holding Company Regime
[C] Double Tax Relief System
[D] CFC Regime
[E] Financing
XVIII PRC Corporation as Owner or Acquisition Vehicle for Foreign Business
Finland
I Introduction
[A] Overview of Finland
[B] General Legal System
[C] General Tax Environment
[1] EU and the Tax Treaty Network
[2] Finnish Corporate Taxation
[3] Recent Changes and Trends in Finnish Taxation in General
[D] Characteristics Unique to Finland
[1] Classification of Finnish Business Entities
[2] General Remarks Relating to Investment in a Finnish Target
[3] Profit Repatriation
[a] Interest Received from a Finnish Target Company
[b] Dividends Received from a Finnish Target Company
[c] Sale of Shares in a Finnish Target Company
[d] Repayments of Invested Capital
[4] Real Estate Holding Transactions
[a] Overview of the Taxation of Different Types of Real Estate Companies
[b] Example of Real Estate Structuring
[5] Finnish Entity as Acquisition Vehicle in Acquisition of a Foreign Entity
[E] Anti-avoidance Provisions in Finnish Tax Legislation
[1] General Rule
[2] Tax-Neutral Business Reorganizations
[3] Thin Capitalization
[4] Hidden Dividend Distributions, Hybrid Dividends and Other Dividend Distributions with the Aim of Tax Avoidance
[5] Transfer Pricing
[a] Arm's Length Principle
[b] Transfer Pricing Documentation
[6] CFC Legislation
II Taxable Acquisitions and Dispositions
[A] Asset Purchase and Share Purchase
[1] Share Purchase
[a] Consequences for Seller
[b] Consequences for Buyer
[c] Consequences for Target
[2] Asset Purchase
[a] Consequences for Seller
[b] Consequences for Buyer
[3] Share Sale Versus Asset Sale
[4] Sale of Partnership Interest
[B] Treatment of Contingent Purchase Price/Contingent Liabilities
[C] Allocation of Purchase Price
[D] VAT and Other Transfer Taxes
[1] VAT
[a] Share Deals
[b] Asset Deals
[c] Other Aspects Relating to VAT
[2] Transfer Tax
III Tax-Free Acquisitions and Dispositions
[A] Types and Requirements
[1] Tax-Exempt Sale of Shares
[a] Consequences for Seller
[b] Consequences for Buyer and Target
[2] Tax-Neutral Transactions
[a] Tax-Neutral Transfer of Business
[b] Tax-Neutral Merger
[c] Tax-Neutral Demerger (Division) and Partial Demerger
[d] Tax-Neutral Exchange of Shares
[B] General Consequences and Objectives
[C] Cross-Border Transactions
[D] Transfer Taxes
[E] Treatment of Non-qualifying Mergers, Divisions, Transfers of Assets and Exchanges of Shares
IV Attribute Preservation and Usage
[A] Tax Losses
[B] Effect of Change in Ownership and Permission to Retain Tax Losses
[C] Tax Losses in Corporate Restructurings and Similar Transactions
V Due Diligence and Contractual Tax Protection
[A] Due Diligence
[B] Tax Indemnification and Other Contractual Provisions
VI Financing and Debt Pushdown Strategies
[A] Leveraging the Taxable Acquisition, Including Cross-Border Aspects
[1] Restrictions to Deductibility of Interest and Thin Capitalization
[B] Debt Pushdown Strategies
[C] Other Ways of Maximizing Tax Deductibility of Interest and Acquisition Expenses
VII Dealing with Compensation Plans
[A] Treatment and Issues in M&A Context
VIII Grouping
[A] Requirements
[B] Consequences and Advantages
[C] Departure of Group Member
IX Planning with Intangibles
[A] Treatment of Transfers Offshore and Licensing Back
X Internal Restructuring Involving Finnish Target
XI Target Breakup or Other Disposition of Unwanted Assets
XII Demergers: Divisions
[A] Domestic Treatment and Issues
[B] Cross-Border Treatment and Issues
[C] Other Issues of Special Concern in Finland
XIII Subsidiary Liquidations
[A] Domestic Treatment and Issues
[B] Cross-Border Treatment and Issues
XIV Joint Ventures
[A] Structuring, Treatment and Issues in Cross-Border Context
XV Equity and Debt Restructuring
[A] Debt Modifications
[B] Equity Modifications
XVI Corporate Expatriations/Redomiciliations
XVII Business Restructuring
XVIII Finnish Corporation as Acquisition Vehicle for Foreign Target
France
I Introduction
[A] Overview of France
[1] General Information
[a] Location and Population
[b] Politics
[c] Economy and Trade Agreements
[2] Investment Environment
[a] Government Incentives
[b] Foreign Investments Regulation
[c] Sources of Finance
[B] General Tax Environment
[1] At a Glance
[2] Territoriality Principle
[3] Relations with the French Tax Authorities
[a] Control by the French Tax Authorities
[b] Advance Tax Ruling Request System
[c] Tax Partnership Program Between the French Tax Authorities and Large and Medium-Sized Companies
II Taxable Acquisitions and Dispositions
[A] Acquisitions Through an Asset Deal
[1] Corporate Income Tax
[a] At the Level of the Selling Company
[b] At the Level of the Acquiring Company
[2] Value-Added Tax (VAT)
[3] Transfer Tax
[a] Transfer of Going Concerns or Clientele
[b] Successor Convention
[c] Real Estate Assets
[B] Acquisitions Through a Share Deal
[1] Corporate Income Tax
[a] At the Level of the Seller
[i] The Seller Is a French Tax Resident
[ii] The Seller Is a Foreign Tax Resident
[b] At the Level of the Purchaser
[2] Transfer Tax
[3] Financial Transaction Tax
III Tax-Free Acquisitions and Dispositions
[A] Accounting Treatment
[B] Corporate Income Tax
[1] Standard Corporate Income Tax Regime
[2] Favourable Tax Regime
[a] Eligible Operations
[b] Conditions to Be Met
[c] Corporate Income Tax Regime
[C] Transfer Taxes
[D] Issues of Special Concern in France
[1] Retroactivity
[2] Carry Forward of Tax Losses
IV Attribute Preservation and Usage
[A] Change of Control: Impact on Tax Assets
[B] Change of Activity
V Due Diligence and Contractual Tax Protection
[A] Due Diligence
[1] Statute of Limitations
[2] Specificity for Transparent Companies as Regard Corporate Income Tax
[B] Tax Indemnifications and Other Contractual Provisions
[1] Indemnifications
[a] Treatment of the Seller
[b] Treatment of the Purchaser
[2] Earn Out
[a] For the Seller
[b] For the Purchaser
VI Financing and Debt Pushdown Strategies
[A] Principle of Freedom to Choose the Means of Financing
[B] Tax Deductibility of Financial Expenses
[1] General Rules
[2] Specific Limitations
[a] General Interest Limitation
[b] Limitation Rules Applicable Related-Party Debt
[i] Loans Granted by Direct Shareholders
[ii] Related-Party Loans
[c] Anti-abuse Limitation: The 'Charasse Amendment' Rules
[d] Interest Paid to Persons Located or Established in Non-cooperative State or Territory
[e] Rules Related to Hybrid Mismatch Arrangements
[f] Proposal for a Directive on Debt-Equity Bias Reduction Allowance
[i] Scope
[ii] The Allowance on Equity
[iii] The Anti-abuse Rules
[iv] The Limitation on Interest Deductions
[v] Entry into Force
[C] WHT on Payments of Interests
[D] Debt Pushdown Strategies
VII Dealing with Compensation Plans
[A] General
[B] Treatment and Issues in M&A Context
[C] Any Other Issues of Special Concern in France
VIII Grouping
[A] Requirements
[B] Consequences and Advantages
[1] General Tax Group Regime
[2] Departure of Group Member
[a] Exit Situations
[b] Consequences
[i] De-neutralization
[ii] Tax Losses
IX Planning with Intangibles
[A] Local Regime (If Favorable)
[B] Treatment of Transfers Offshore and Licensing Back (If Local Regime Is Unfavourable)
[1] Royalty Issues
[2] Valuation of Intangibles
[C] Research and Development (R&D) Tax Credit
[1] Eligible Expenses
[2] Computation of the R&D Tax Credit
[3] Use of the R&D Tax Credit
[D] Innovation Tax Credit
X Spin-Offs
[A] Tax Treatment in a Domestic Context
[B] Cross-Border Treatment and Issues
XI Subsidiary Liquidations
[A] Domestic Treatment and Issues
[1] Judicial Liquidation
[2] Taxation of Shareholders
[a] Registration Duties
[b] Income Tax Triggered by Debt Forgiveness
[B] Cross-Border Treatment and Issues
[1] Liquidation Surplus Paid to Foreign Shareholder
[2] Dissolution Without Liquidation into a Foreign Merging Company
XII Joint Ventures
[A] Structuring, Treatment and Issues in Cross-Border Context
[1] Creation of the Joint-Venture Vehicle
[a] Capital Gain Taxation
[b] Transfer Tax
[2] Dividend Payments
[a] French WHT
[b] Taxation at the Level of the French Shareholders
[B] Substantive Issues
[1] Permanent Establishment/Residency
[2] Transfer Pricing
XIII Equity and Debt Restructuring
[A] Debt Modifications (Subsidies and Waiver of Debts)
[1] For the Company Granting the Subsidy/Waiver of Debt
[2] For the Beneficiary
[B] Equity Modifications
[1] Capitalization of Receivables in Distressed Companies
[2] Capital Contributions to Distressed Companies
[3] Coup d'accordéon
[a] Overview
[b] Accounting and Tax Consequences at the Issuing Company Level
[c] Accounting and Tax Consequence at the Shareholder Level
[i] Share Capital Decrease
[ii] Share Capital Increase
[iii] Subsequent Transfer of Shares
[4] Share Buybacks Before a Capital Decrease
[a] Corporate Income Tax
[b] Registration Duties
[C] Any Other Issues of Special Concern in France
XIV Corporate Expatriations
[A] Transfer of the Registered Office of a French Company Outside France
[B] Transfer of the Registered Office of a Foreign Company to France
XV French Corporation as Acquisition Vehicle for Foreign Target
Germany
I Introduction
[A] Overview of Germany
[B] General Legal System
[C] General Tax Environment
[1] General Principles of German Taxation
[2] Income Tax (Einkommensteuer) and Trade Tax (Gewerbesteuer)
[3] Corporate Tax (Körperschaftsteuer)
[4] VAT (Umsatzsteuer)
[5] Real Estate Transfer Tax (Grunderwerbsteuer)
[6] Tax Administration
[D] Characteristics Unique to Germany
II Taxable Acquisitions and Dispositions
[A] Treatment of Seller and of Target Entity
[1] Seller's Tax Position
[a] Sale of Assets by a Sole Proprietor
[b] Sale of Assets by a Partnership
[c] Sale of Assets by a Corporation
[d] Roll-Over
[2] Purchaser's Tax Position
[3] VAT
[4] Real Estate Transfer Tax
[5] Typical Secondary Tax Liabilities for Purchaser
[6] Acquisition of Partnership
[a] Tax Aspects for Seller
[b] Tax Aspects for Purchaser
[c] Real Estate Transfer Tax
[7] Differences Between Publicly Held Target and Privately Held Target
[B] Asset Purchase and Share Purchase
[1] Share Purchase
[2] Share Purchase/Level of the Target
[a] Loss of Tax Losses
[3] Loss of Interest Carried Forward
[4] Share Sale and Purchase
[a] Withholding Tax
[5] Tax Liability in Case of a Tax Residence of the Transferor in Germany
[a] Shares Held as Private Assets
[b] Shares Held as Business Assets
[6] No Tax Residence in Germany
[7] Asset Purchase: Consequences to Transferor and Transferee
[8] Focus: Real Property Holding Companies
[9] Asset Deal
[C] Treatment of Contingent Purchase Price/Contingent Liabilities
[D] Allocation of Purchase Price
[E] VAT and Other Transfer Taxes
[1] VAT
[2] Real Estate Transfer Tax
[3] Notary Fees
III Tax-Free Acquisitions and Dispositions
[A] Types and Requirements
[1] Capital Gains Exemption
[2] Sale of a German Branch
[3] Sale of a Partnership Interest
[B] General Consequences and Objectives
[1] General Exemption for German Corporations with Corporate Subsidiaries
[2] Re-exemption for Banks, Financial Institutions and Certain Financial Holding Companies
[3] Exemption Also Applicable for Capital Gains
[4] Interplay with Treaty Exemptions
[C] Cross-Border Transfers
[1] Taxation of Dividends
[2] No Special Rules on Capital Gains
[3] Taxation of Income of the Holding Company from Foreign Noncorporate Subsidiaries
[4] Qualification as a Share in a Corporation
[a] Corporation Test
[b] Share Test
[5] Taxation of a Partnership as Holding Company
[6] CFC Regime
[a] General CFC Regime
[b] Favorable Treatment of Subsidiaries in EU/EEA Countries
[7] Tax-Optimized Inbound Acquisition
[D] Transfer Taxes
[1] VAT
[2] Real Estate Transfer Tax
[E] Issues of Special Concern in Germany
[1] Asset Deal
[2] Share Deal
[3] Tax-Neutral Demerger
[4] Other Structuring Considerations
[a] No Cross-Border Fiscal Unity/Group Relief
[b] Taxation of Dividends Paid by the German Holding Company to Its Ultimate Shareholder
IV Attribute Preservation and Usage
[A] Change in Ownership Impact on Tax Assets
[1] Overview
[2] Elements of a Harmful Change of Control
[a] Harmful Transfer of Shares
[b] Notion of Unused Losses
[3] Exemptions from the Loss-Trafficking Rules
[a] Intragroup Reorganizations
[b] Mobilization of Built-In-Gain
[B] Allocation of Compensation and Other Deductions Between Pre-and Post-closing Periods
[C] Business Continuation Exemption
V Due Diligence and Contractual Tax Protection
[A] Due Diligence
[1] General
[2] Typical Risk Areas to Be Analyzed from a German Tax Perspective
[3] Hidden Distributions of Profits
[4] Transfer Pricing
[5] Loss Carry Forwards and Interest Carry Forwards
[6] Valuation of Assets in the Financial Statements
[7] Fiscal Unity for Corporate Income Tax and Trade Tax Purposes
[8] Fiscal Unity for VAT Purposes
[9] Holding Periods
[10] CFC Taxation
[11] Adjustment of Input VAT
[12] Real Estate Transfer Tax
[13] Tax Indemnity Obligations of the Target from Previous Transactions
[B] Tax Indemnifications and Other Contractual Provisions
[1] General
[2] Tax Due Diligence
[3] Buyer's Perspective
[a] Tax Indemnity
[b] Tax Reps and Warranties
[4] Seller's Perspective
[a] Tax Indemnity
[b] Control Rights
[5] Specific Matters
[a] Asset Deal
[b] Fiscal Unity
[i] Income Tax
[ii] VAT Aspects
[iii] Partnerships
VI Financing and Debt Pushdown Strategies
[A] Leveraging the Taxable Acquisition, Including Cross-Border Aspects
[1] Corporations
[2] Partnerships
[3] Limitation on the Deductibility of Interest
[4] Arm's Length Principle
[B] Debt Pushdown Strategies
[1] Merger of the Acquisition Company with the Target Company
[2] Creation of a Fiscal Unity
[3] Collapse Merger of a Partnership
[4] Leveraged Dividend Distribution
[C] Other Ways of Maximizing Tax Deductibility of Interest and Acquisition Expenses
[1] Double Dip
[2] Act for Combating Tax Havens
VII Dealing with Compensation Plans
[A] Treatment and Issues in M&A Contexts
[1] Overview
[2] Stock Options
[a] General Tax Aspects
[b] Specific Aspects of M&A Transactions
[3] Other Share-Based Compensations
[a] Restricted Stock
[b] Stock Appreciation Rights and Phantom Stock
[c] Other Forms
[4] Pension Plans
[B] Other Issues of Special Concern in Germany
VIII Grouping
[A] Requirements
[1] Corporate Income Tax and Trade Tax
[a] Parties
[b] Profit and Loss Transfer Agreement
[c] Financial Integration
[2] VAT Fiscal Unity
[a] Parties
[b] Financial Integration
[c] Economic Integration
[d] Organizational Integration
[B] Consequences and Advantages
[1] Corporate Income Tax
[2] Trade Tax
[3] VAT
[C] Departure of Group Member
IX Planning with Intangibles
[A] Local Regime
[1] General
[a] Definition of Intangibles
[b] Definition of Goodwill
[2] Basic German Tax Principles Regarding Intangibles
[a] Intangibles
[b] Goodwill
[c] Amortization
[3] Acquisition of Intangibles
[a] Asset Deal: Seller's Tax Position
[b] Asset Deal: Purchaser's Tax Position
[c] Share Deal: Seller's Tax Position
[d] Share Deal: Purchaser's Tax Position
[B] Other Issues of Special Concern in Germany
[1] Cross-Border Acquisition of Corporations and Intangibles
[a] Asset Deal
[b] Share Deal
[2] Tax-Free Mergers and Other Forms of Restructuring and Intangibles
X Internal Restructuring Involving German Target
XI Target Breakup or Other Disposition of Unwanted Assets
XII Demergers
[A] Domestic Treatment and Issues
[1] Scope
[2] Basic Principles
[3] Civil Law Procedure of a Demerger
[4] Tax Consequences of Demergers
[a] Split-Up and Spin-Off by a Corporation to Another Corporation
[i] Tax Consequences at the Level of the Transferring Corporation
[ii] Tax Consequences at the Level of the Absorbing Corporation
[iii] Tax Consequences at the Level of the Shareholders
[b] Split-Up and Spin-Off by a Corporation to a Partnership
[i] Tax Consequences at the Level of the Transferring Corporation
[ii] Tax Consequences at the Level of the Absorbing Partnership
[iii] Tax Consequences at the Level of the Shareholders
[c] Drop-Down
[i] Tax Consequences at the Level of the Transferring Corporation
[ii] Tax Consequences at the Level of the Absorbing Corporation/Partnership
[iii] Tax Consequences at the Level of the Shareholders
[B] Cross-Border Treatment and Issues
[C] Other Issues of Special Concern in Germany
XIII Subsidiary Liquidations
[A] Domestic Treatment and Issues
[1] Liquidation of a Corporation
[a] Company Level
[i] Corporate Income Tax
[ii] Trade Tax
[b] Shareholder Level
[i] Corporate Income Tax
[ii] Trade Tax
[iii] Taxation of Private Investors
[iv] Shares Held as Business Assets
[v] Shares Held as Private Assets
[vi] Treatment of Liquidation Losses
[2] Liquidation of a Partnership
[a] Corporate Income Tax
[b] Taxation of Private Investors
[c] Treatment of Liquidation Losses of Partnerships
[B] Cross-Border Treatment and Issues
[1] Liquidation of a German Subsidiary Having a Foreign Parent Corporation
[a] Taxation of the Subsidiary
[b] Taxation of the Shareholder
[2] Liquidation of a Foreign Subsidiary Having a Domestic Parent Corporation
[a] No Taxation of the Subsidiary in Germany
[b] Taxation of the Distributed Liquidation Proceeds at the Level of the Shareholder
[C] Other Issues of Special Concern in Germany
[1] Reorganization of Assets
[2] Tax-Neutral Hive-Down
[3] Applicability of Capital Gains Exemption and Seven Years Holding Period
[4] Public Versus Private Transactions
[5] Other Tax Consequences
XIV Joint Ventures
[A] Structuring, Treatment and Issues in Cross-Border Context
[1] General
[2] Non-entity JVs
[3] Choice of Entity and Structure of JVs
[a] Domestic JVs
[i] Partnership
[ii] Corporation
[b] Cross-Border JVs
[4] Property Transfers on Formation
[a] Treatment of Built-in-Gain or Loss
[i] Transfer of Single Assets
[ii] Transfer of Shares, Partnership Interests or Operating Units
[b] Indemnification Provisions
[5] Compensation Planning
[6] Allocation and Taxation of Operating Results
[a] Corporations
[b] Partnerships
[c] Taxation of Distributions
[i] Corporate Shareholder
[ii] Partnership as Shareholder
[d] Distributions by Partnerships Which Were Subject to the Reduced Tax Rate
[e] Double Tax Relief
[i] Foreign JV with German Participant
[ii] German JV with Foreign Participant
[7] Exit/Unwind Scenarios
[a] JV as Corporation
[i] Corporate Shareholder
[ii] Individual Shareholder
[b] JV as Partnership
[B] Any Other Issues of Special Concern in Germany
[1] Planning Techniques
[2] Compliance
XV Equity and Debt Restructuring
[A] Debt Modifications
[1] Debt Waiver
[2] Conditional Debt Waiver
[3] Debt Assumption
[4] Debt-for-Equity Exchange
[5] Debt Buy-Back
[6] Creditor's Loss Deduction
[7] Constructive Dividends/Income Adjustments
[8] Loss Restrictions for Shareholder Loans and Shareholder Collateral
[B] Equity Modifications
[C] Any Other Issues of Special Concern in Germany
[1] Internal Restructuring in Germany
[a] Introduction
[b] The Legal Framework for Internal Restructurings
[2] Income-Based Taxation of Internal Restructurings
[3] Transformation of a Corporation into a Partnership
[a] Taxation at the Level of the Transferring Entity
[b] Taxation at the Level of the Receiving Entity
[c] Taxation at the Level of the Shareholders of the Transferring Corporation
[4] Merger and Demerger of a Corporation into a Corporation
[a] Taxation at the Level of the Transferring Corporation
[b] Taxation at the Level of the Receiving Corporation
[c] Taxation at the Level of the Shareholders of the Transferring Corporation
[5] Specific Requirements for Demergers
[6] Contribution into a Corporation
[a] General Remarks
[b] Taxation at the Level of the Receiving Corporation
[c] Taxation at the Level of Transferring Entity
[d] Sale of Newly Granted Shares as Opposed to Sale of Contributed Shares
[7] Change of the Legal Form of a Corporation into a Partnership and Vice Versa
[a] Conversion of a Corporation into a Partnership
[b] Conversion of a Partnership into a Corporation
[8] VAT
[9] Real Estate Transfer Tax
[10] Change-of-Control Rules
XVI Corporate Expatriations/Redomiciliations
[A] Tax Consequences at the Level of the Corporation
[1] Redomiciliation to Another EU Member State
[a] Permanent Establishment in Germany
[b] Allocation of Assets to a German Permanent Establishment
[2] Redomiciliation to a Non-EU Member State
[3] Ongoing Taxation
[B] Consequences for the Shareholders
[1] Interest Is Held as a Business Asset
[2] Interest Is Held as a Private Asset
[C] Possible Restructuring
XVII Business Restructurings
XVIII German Corporation as Acquisition Vehicle for Foreign Target
India
I Introduction
[A] General Legal System
[1] Recent Developments
[a] Establishment of the Gujarat International Financial Tec-City ('GIFT City')
[b] Introduction of Tax Regime for Virtual Digital Assets
[2] Foreign Investment in India
[a] Foreign Direct Investment
[b] Secondary Sale and Purchase Transactions
[c] Portfolio Investment
[d] Foreign Venture Capital Investors (FVCI)
[e] Issue of Shares under Merger/Amalgamation/Demerger
[f] American Depository Receipts (ADR)/Global Depository Receipts (GDR)
[B] General Tax Environment
[1] Scope and Framework of Taxation in India
[2] Role of Tax Treaties
[3] Taxation of Companies
[a] Corporate Tax
[b] Minimum Alternate Tax (MAT)
[c] Taxation of Dividend
[d] Royalty and FTS
[e] Interest
[f] Equalisation Levy
[g] Capital Gains
[i] Taxation of Capital Gains
[ii] Taxation in Case of Buyback of Shares
[h] Significant Economic Presence
[4] Holding Company Jurisdiction Analysis
[a] Mauritius
[b] Singapore
[c] The Netherlands
[d] Cyprus
[5] Taxability of Offshore Transfers
[a] Determination of FMV of Assets of Indian and Foreign Company/Entity
[b] Determination of Income Attributable to Assets in India
[6] BEPS - India's Perspective
[7] Other Aspects
[a] Compliance Requirement
[b] Transfer Pricing
[i] TP on Specified Domestic Transactions
[ii] Determination of ALP/Range
[c] Country-by-Country Reporting (CbCR)
[d] Thin Capitalization Rules
[e] Secondary Adjustment
[f] Tax Incentives
[8] Dispute Resolution Mechanism
[a] Appeals (under Domestic Law)
[b] Mutual Agreement Procedure
[c] Board for Advance Rulings
[C] Types/Classification of Major Business Entities
[1] Entry Options in India
[a] Liaison Office
[b] Branch Office
[c] Project Office
[d] Indian Subsidiary
[e] General Partnership and Limited Liability Partnership
II Taxable Acquisitions and Dispositions
[A] Sale and Purchase of Shares and Assets
[1] Acquisition by Way of Purchase of Shares
[a] Consequences for the Acquirer
[b] Consequences for the Seller
[2] Acquisition by Purchase of Assets
[a] Consequences for the Acquirer
[b] Consequences for the Seller
[i] Itemized Sale
[ii] Slump Sale
[B] Treatment of Contingent Purchase Price/Contingent Liabilities
[1] Contingent Purchase Price
[2] Contingent Liabilities
[C] Allocation of Purchase Price
[D] GST and Other Transfer Taxes
[1] GST
[2] Stamp Duty
III Tax-Free Acquisitions and Dispositions
[A] Types and Requirements
[B] General Consequences and Objectives
[1] Capital Gains Tax Exemption
[2] Depreciation and Expenditure Accounting
[3] Taxation of Shareholders in the Merging Company
[C] Cross-Border Transfers
[D] Transfer Taxes
[E] Issues of Special Concern in India
IV Attribute Preservation and Usage
[A] Change in Ownership Impact on Tax Assets
[B] Allocation of Compensation and Other Deductions Between Pre and Post-closing Periods
[1] Set Off of Brought-Forward Business Losses and Unabsorbed Depreciation in Case of Merger
[2] Set Off of Brought-Forward Business Losses and Unabsorbed Depreciation in Case of Demerger
[3] Other Issues of Special Concern in India
V Due Diligence and Contractual Tax Protection
[A] Due Diligence
[1] Common Tax Due Diligence Issues
[B] Tax Indemnifications and Other Contractual Provisions
VI Financing and Debt Pushdown Strategies
[A] Leveraging the Taxable Acquisition, Including Cross-Border Aspects
[B] Debt Pushdown Strategies
[1] Borrowings by an Indian Company
[C] Other Ways of Maximizing Tax Deductibility of Interest and Acquisition Expenses
VII Dealing with Compensation Plans
[A] Treatment and Issues in M&A Context
[B] Any Other Issues of Special Concern in India
VIII Grouping
[A] Requirements
[B] Consequences and Advantages
[C] Departure of Group Member
IX Planning with Intangibles
[A] Local Regime (If Favourable)
[B] Treatment of Transfers Offshore and Licensing Back (If Local Regime Is Unfavourable)
[C] Any Other Issues of Special Concern in India
X Internal Restructuring
XI Target Breakup or Other Dispositions of Unwanted Assets
XII Demergers
[A] Domestic Treatment and Issues
[1] Taxability in the Hands of Shareholders in Case of Demerger
[2] Depreciation on the Assets Being Transferred
[3] Allowability of Expenditure Relating to Demerger
[B] Cross-Border Treatment and Issues
[C] Other Issues of Special Concern in India
[1] Demerger and Court Jurisdiction
[2] Some Other Issues
XIII Subsidiary Liquidations
[A] Domestic Treatment and Issues
[B] Cross-Border Treatment and Issues
[C] Any Other Issues of Special Concern in India
XIV Joint Ventures
[A] Structuring, Treatment and Issues in Cross-Border Context
[1] Tax Treatment for JVs
[2] Tax Treatment If the JV Would Be Treated as an AOP
[B] Any Other Issues of Special Concern in India
XV Equity and Debt Restructuring
[A] Debt Modifications
[B] Equity Modifications
[1] Share Buyback
[a] Exchange Control Regulations
[b] Taxation of Share Buyback
[2] Capital Reduction
[C] Other Issues of Special Concern in India
XVI Corporate Expatriations
XVII Business Restructurings
XVIII Indian Corporation as Acquisition Vehicle for Foreign Target
[A] Exchange Control Implications
[B] Tax Implications
[C] Requirement of TRC
[D] Transfer Pricing
[E] Reporting of TP Transactions
[F] Secondary Adjustment
[G] General Anti-avoidance Rule
Italy
I Introduction
[A] Civil Law Background
[B] Summary of Key Corporate Income Tax Principles
[C] Taxation of Dividends
[D] Anti-avoidance Rules and Rulings
[E] Ruling Procedures
II Taxable Acquisitions and Dispositions
[A] Tax on Capital Gains: General
[B] Sale of Shares
[C] Sale of a Business
[D] Contribution of a Business
[E] Acquisition of an Italian Target by a Foreign Acquiror
[1] Form of Transaction
[2] Consideration Used
[3] Tax Treatment of Foreign Acquiror
[a] Interest Deduction on Acquisition Debt
[b] Tax Recognition of Goodwill
[c] Interest Withholding Tax
[d] Dividend Withholding Tax
[e] Transfer Taxes and Responsibility for Assessments
[4] Tax Treatment of Domestic Target
[5] Tax Treatment of Italian-Resident Shareholders of Domestic Target
[F] Acquisition of Part of Domestic Target's Business by a Foreign Acquiror
[1] Asset Acquisition
[2] Share Acquisition
[G] Acquisition by an Italian-Resident Acquiror of Part or All of a Foreign Target
[1] Acquisition of Shares of Foreign Target
[a] Tax Treatment of Domestic Acquiror
[b] Tax Treatment of Foreign Target Shareholders
[c] Post-acquisition Restructuring
[d] VAT and Transfer Taxes
[2] Acquisition of Business Assets of Foreign Target
[a] VAT and Transfer Taxes
III Tax-Free Acquisitions and Dispositions
[A] Share-per-Share Exchange
[B] Merger
[C] Mergers of Equals
IV Attribute Preservation and Usage
[A] Losses of the Target Company or Target Business
V Due Diligence and Contractual Tax Protection
VI Financing and Debt Pushdown Strategies
[A] Deductibility of Interest Expenses
[B] Hybrid Debt
[C] Impact of EU Law
VII Dealing with Compensation Plans
[A] General
[B] Deductibility to Issuer
VIII Grouping
[A] Domestic Tax Consolidation
[B] Consortium Relief
[C] Worldwide Tax Consolidation
IX Planning with Intangibles
[A] Operations Aimed at Delocalizing the Flow of Royalties to Another Tax Jurisdiction
[B] IP Repatriation into Italy
[C] IP Sub-licensing to Another Group Foreign Company
X Internal Restructuring Involving Italian Target
XI Target Breakup or Other Disposition of Unwanted Assets
[A] Like-Kind Exchanges
[B] Pre-acquisition Spinoff
XII Tax-Free Demergers/Spinoff Distributions
[A] Demerger
XIII Subsidiary Liquidations
[A] Domestic Treatment
[B] Special Concerns
XIV Joint Ventures
XV Equity and Debt Restructuring
[A] Equity Contributions
[B] Debt Restructuring
[1] In General
[2] Conversion into Equity
[3] Debt Waiver
XVI Corporate Expatriations
XVII Business Restructuring
XVIII Italian Corporation as Acquisition Vehicle for Foreign Target
[A] Treatment of Foreign Source Income: Foreign Tax Credit
[B] CFC Legislation
Japan
I Introduction
[A] Overview of Japan
[B] General Legal System
[C] General Tax Environment
[1] Classification of Business Entities
[2] Participation Exemption Regime
[3] Controlled Foreign Corporation (CFC) Regime
[4] Foreign Tax Credit Regime
[D] Characteristics Unique to Japan
[1] Donation Income and Expense
II Taxable Acquisitions and Dispositions
[A] Treatment of Seller and of Target Entity
[1] Consequences for Selling Stockholders
[2] Japanese Real Property Interests Disposed of by Foreign Corporations or Non-residents
[3] Consequences for Acquirer
[4] Consequences for Target
[B] Sales and Purchase of Shares and Assets
[1] Consequences for Seller
[2] Consequences of Asset Sale to Buyer
[3] Asset Sales Between Group Companies
[C] Treatment of Contingent Purchase Price/Contingent Liabilities
[D] Allocation of Purchase Price
[E] VAT and Other Transfer Taxes
[1] Consumption Tax (VAT - Shouhi zei)
[2] Indirect Taxes: Transfer (Conveyance) Taxes
[a] Real Property Acquisition Tax (Fudousan shutoku zei)
[b] Registration Tax (Touroku menkyo zei)
[3] Stamp Tax (Inshi zei)
[F] Target Break-Up or Other Disposition of Unwanted Assets
III Tax-Free Acquisitions and Dispositions
[A] Types and Requirements
[1] Contribution-In-Kind (Gembutsu Shusshi)
[a] 100% Shareholding Relationship
[b] More than 50% Shareholding Relationship
[c] Joint Business
[2] Mergers (Gappei)
[a] General
[b] 100% Shareholding Relationship
[c] More than 50% Shareholding Relationship
[d] Joint Business
[e] Triangular Mergers (Sankaku Gappei)
[f] Merger with Boot
[3] Share-for-Share Exchange (Kabushiki Kokan) and Share Transfer (Kabushiki Iten)
[a] General
[b] Tax-Qualified Share Exchange
[i] 100% Shareholding Relationship
[ii] More than 50% Shareholder Relationship
[iii] joint Business.
[iv] Share Exchange with Boot
[4] Squeeze-Outs
[5] Change of Corporate Form
[a] Types of Entities under the Companies Act (Kaisha Hou)
[b] Conversions from One Type of Entity to Another
[B] General Consequences and Objectives
[C] Cross-Border Transfers
[1] Issuance of Foreign Parent Company Shares to Non-resident Shareholders
[2] Issuance of Shares in a Tax Haven Company
[D] Transfer Taxes
[1] Real Property Acquisition Tax (Fudousan shutoku zei)
[2] Registration Tax (Touroku menkyo zei)
[3] Stamp Tax (Inshi zei)
[4] Consumption Tax (VAT - Shouhi zei)
IV Attribute Preservation and Usage
[A] Change in Ownership in Impact on Tax Assets
[1] Net Operating and Built-In Losses Following a More than 50% Ownership Change
[2] Limitation on Utilization of NOLs and Built-In Losses upon Merger
[B] Allocation of Compensation and Other Deductions Between Pre- and Post-closing Periods
[C] Any Other Issues of Special Concern in Japan
V Due Diligence and Contractual Tax Protection
[A] Due Diligence
[B] Tax Indemnifications and Other Contractual Provisions
VI Financing and Debt Push-Down Strategies
[A] Leveraging the Taxable Acquisition, Including Cross-Border Aspects
[1] General Thin Capitalization Rules and Other Limitations on the Deductibility of Interest
[2] Arm's-Length Interest Rate
[3] Withholding Tax
[4] Hybrid Financings (Double-Dip Planning)
[B] Debt Push-Down Strategies
[C] Other Ways of Maximizing Tax Deductibility of Interest and Acquisition Expenses
VII Dealing with Compensation Plans
[A] Treatment and Issues in M&A Context
[B] Any Other Issues of Special Concern in Japan
[1] Transfer of Retirement Plan Obligations
VIII Grouping
[A] Requirements
[1] GROUP Relief Regime
[2] Non-consolidated Wholly Owned Group (Group Companies)
[B] Consequences and Advantages
[1] Group Relief Regime
[2] Group Companies: Deferral of Gains or Losses from the Transfer of Certain Assets
[3] Group Companies: Donations
[4] Group Companies: Dividends-In-Kind
[5] Group Companies: Reduction of Dividend Received Deduction by Allocable Interest Expense
[C] Departure of Group Member
IX Planning with Intangibles
[A] Local Regime (If Favourable)
[1] IP Holding Company
[B] Treatment of Transfers Offshore and Licensing Back (If Local Regime Is Unfavourable)
[1] Migration
[a] General
[b] Cost Sharing
[C] Any Other Issues of Special Concern in Japan
X Internal Restructuring Involving Japanese Target
XI Target Break-Up or Other Disposition of Unwanted Assets
XII Demergers: Corporate Demerger - Kaisha Bunkatsu
[A] Domestic Treatment and Issues
[1] General (Corporate Demerger - Kaisha Bunkatsu)
[2] Tax-Qualified Demerger
[a] 100% Shareholding Relationship Demerger
[b] More than 50% Shareholding Relationship Demerger
[c] Joint Business Demerger
[d] Spin-Off Type of Demerger
[B] Transfer Taxes
[1] Real Property Acquisition Tax (Fudousan shutoku zei)
[2] Registration Tax (Touroku menkyo zei)
[3] Stamp Tax (Inshi zei)
[4] Consumption Tax (VAT - Shouhi zei)
[C] Cross-Border Treatment and Issues
[1] Issuance of Foreign Parent Company Shares to Non-resident Shareholders
[2] Issuance of Shares in a Tax Haven Company
[D] Dividends-In-Kind/Spin-Off
XIII Subsidiary Liquidations
[A] Domestic Treatment and Issues
[1] Taxable Liquidation
[2] Liquidation of a Group Company (Wholly Owned) Subsidiary
[3] Liquidation of a Japanese PE
[B] Cross-Border Treatment and Issues
XIV Joint Ventures ('JVs')
[A] Structuring, Treatment and Issues in Cross-Border Context
[1] Corporate JV
[2] Partnership JV
[B] Taxation of Operating Results and Distributions
[1] Corporate JV
[2] Partnership JV
[C] Exit/Unwind
[1] Corporate JV
[2] Partnership JV
XV Equity and Debt Restructuring
[A] Debt Modifications
[1] Debt Forgiveness
[a] Issuer Consequences
[b] Holder Consequences
[2] Debt-Equity Swap
[B] Equity Modifications
[1] Capital Increase
[2] Share Buybacks
[3] Disguised Dividend
XVI Corporate Expatriations
[A] General
[B] Anti-corporate Inversion Rules
XVII Business Restructurings
XVIII Japanese Corporation as Acquisition Vehicle for Foreign Business
Republic of Korea
I Introduction
[A] General Tax Environment
[B] General Tax Rules on Reorganization
[1] Main Characteristics of Current Reorganization Rules
[2] Transaction Tax Considerations
II Taxable Acquisitions and Dispositions
[A] Non-qualified Merger
[1] Tax Consequences for Target
[2] Tax Consequences for Shareholders of Target
[3] Tax Consequences for Acquiror
[4] Tax Consequences for Shareholders of Acquiror
[B] Sale and Purchase of Shares
[1] Tax Consequences for Seller (Transferor)
[2] Tax Consequences for Buyer
[3] Tax Consequences for Target
[C] Sale and Purchase of Assets
[1] Tax Consequences for Seller (Transferor)
[2] Tax Consequences for Buyer (Transferee)
[D] Treatment of Contingent Purchase Price/Contingent Liabilities
[1] Earn-Out Payments
[2] Clawback
[E] Allocation of Purchase Price
[F] Special Considerations
[1] Triggering Events for Gain Realization
[2] Local Tax and VAT Consequences
[3] Special Status of Target
[4] Loss Limitation
[G] Tax Indemnification and Other Contractual Provisions
III Tax-Free Acquisitions and Dispositions
[A] Merger
[1] Requirements for a Qualified Merger
[2] Issues to Consider in Reviewing Requirements for Qualified Merger
[a] One-Year Requirement
[b] "COI" Requirement
[c] Distribution Requirement
[d] Continuing Shareholding Requirement
[e] "COBE" Requirement
[f] Continuity of Employment Requirement
[3] Tax Consequences
[a] Tax Consequences for Target
[b] Tax Consequences for Shareholders of Target
[c] Tax Consequences for Acquiror
[d] Tax Consequences for Shareholders of Acquiror
[e] Tax Consequences of Post-Merger Capitalization of the Gains from Merger
[4] Post-Merger Requirements and Recapture of Tax Benefits
[a] Post-Merger Requirements
[b] Effects of Recapture of Tax Benefits
[B] Comprehensive Share Exchange/Transfer
[1] Requirements for Qualified Comprehensive Share Exchange/Transfer
[2] Tax Consequences
[a] Tax Consequences for Target
[b] Tax Consequences for Shareholders of Target
[c] Tax Consequences for Acquiror
[d] Tax Consequences for Shareholders of Acquiror
[3] Post-transaction Requirements
[C] Comprehensive Asset Transfer
[1] Requirements for Qualified Comprehensive Asset Transfers
[2] Tax Consequences
[a] Tax Consequences for Target
[b] Tax Consequences for Shareholders of Target
[c] Tax Consequences for Acquiror
[d] Tax Consequences for Shareholders of Acquiror
[3] Post-transaction Requirements
IV Attribute Preservation and Usage
[A] Change in Ownership Impact on Tax Assets
[1] General Rule
[B] Allocation of Compensation and Other Deductions between Pre- and Post-closing Periods
[1] NOL Carryover
[a] NOL
[b] NOL Carryover
[c] Separate Accounting Requirement
[2] Carryover of Tax Reductions and Tax Credits
[a] Tax Reduction and Tax Credit
[b] Carryover of Tax Reductions and Tax Credits
[3] Tax Adjustment Carryover
[a] Meaning of Tax Adjustment Carryover
[b] Tax Adjustment Carryover
V Due Diligence and Contractual Tax Protection
[A] Due Diligence
[1] Triggering Events for Gain Realization
[2] Local Tax and VAT Consequences
[3] Special Status of Target
[4] Loss Limitation
[B] Tax Indemnification
VI Financing and Debt Pushdown Strategies
[A] Leveraging the Taxable Acquisition, Including Cross-Border Aspects
[B] Debt Pushdown Strategies
[1] Debt Versus Equity
[2] Statutory Limits on Interest Deduction
[a] Thin-Capitalization Rule
[b] Deemed- Capitalization Rule
[c] Limitation on Excessive Interest Deduction
[d] Hybrid Financial Transactions
[C] Other Ways of Maximizing Tax Deductibility of Interest and Acquisition Expenses: Withholding Tax on Interest Payments
[1] General Rule
[2] Domestic Law Exemptions
[3] Eligibility for Reduced Withholding Tax Rates under Income Tax Treaties
[a] Residence
[b] Claiming Reduced Withholding Tax Rates under Income Tax Treaties: Applicable to Korean Sourced Income Paid from July 1, 2012
[c] Foreign Hybrid Entities and Substantive Ownership
VII Dealing with Compensation Plans
VIII Grouping
[A] Requirements
[1] Complete Control
[2] Eligible Entities
[B] Consequences and Advantages
[1] Determination of Taxable Income for Each Taxable Year
[2] Consolidated NOLs
[a] Nondeductible NOLs of the Parent Company
[b] Nondeductible NOLs of the Member Subsidiaries
[C] Changes in Group Member
[1] Addition of a Member
[2] Departure of a Member
[D] Reporting Requirement
[1] Opting Out from the Consolidated Tax Return Filing Regime
[2] Cancellation of the Application of the Consolidated Tax Return Regime
IX Planning with Intangibles
[A] Treatment of Transfers Offshore and Licensing Back (If Local Regime Is Unfavorable)
[1] IP Transfer by a Korean Corporation to a Foreign Corporation
[2] IP Transfer by a Foreign Corporation to a Korean Corporation
[B] Cost-Sharing Arrangement
[C] Transfer of Know-How versus Provision of Services
X Internal Restructuring Involving Korean Target
[A] Dividend Received Deductions
[B] CFC Rule
XI Target Breakup or Other Dispositions of Unwanted Assets
XII Demergers
[A] Domestic Treatment and Issues
[B] Non-qualified Spin-Offs
[1] Non-qualified Horizontal Spin-Offs
[a] Tax Implications to the Divided Company and Its Shareholders
[b] Tax Implications to the New Spin-Off Company and Its Shareholders
[2] Non-qualified Vertical Spin-Offs
[C] Qualified Spin-Offs
[1] Qualified Horizontal Spin-Offs
[a] Requirements for Qualified Horizontal Spin-Offs
[b] "Independent Business Unit" Requirement
[c] Tax Consequences
[2] Qualified Vertical Spin-Offs
[a] Requirements for Qualified Vertical Spin-Offs
[b] Tax Consequences
[3] Recapture of the Tax Benefits after the Spin-Offs
[a] Qualified Horizontal Spin-Offs
[b] Qualified Vertical Spin-Offs
[D] Other Matters
[1] Horizontal Spin-Off Followed by Merger
[2] Vertical Spin-Off Followed by Merger
[3] In-Kind Contribution
[a] Non-qualified In-Kind Contribution
[b] Qualified In-Kind Contribution
[c] Recapture of Tax Benefits after Qualified In-Kind Contribution
XIII Subsidiary Liquidations
[A] Domestic Treatment and Issues
[1] Liquidation Procedure and Tax Consequences
[2] Tax-Free Liquidation of Subsidiary
[B] Cross-Border Treatment and Issues
XIV Joint Ventures
[A] Structuring, Treatment and Issues in Cross-Border Context
[B] Tax Implications upon In-Kind Contribution of Property on Formation
[1] Treatment of Built-In Gain
[2] Treatment of Built-In Loss
[C] Tax Impact on Ongoing Operations of JV
[1] Tax to JV
[2] Tax on Distribution to Shareholders (Partners)
[D] Tax Implications upon Exit
[1] Liquidation of JV
[2] Disposition of JV Interest
XV Equity and Debt Restructuring
[A] Debt Modifications
[1] Tax Effect on Debtor
[2] Tax Effect on Creditors
[B] Equity Modifications
[C] Special Treatment
[1] Asset Transfer
[2] Acquisition and Repayment of Debt by Corporate Shareholders
[3] Forgiveness of Debt by Financial Institution
[4] Share Exchange
XVI Corporate Expatriations
[A] Determination of the Domestic Corporation Status under the CITA
[B] Determination of the Residence Status under the Tax Treaty
[C] Corporate Expatriation as Taxable Event
XVII Business Restructurings
XVIII Korean Corporation as Acquisition Vehicle for Foreign Target
[A] Holding Company Regime
[B] Pros and Cons of Locating a Holding Company in Korea
Mexico
I Introduction
[A] Overview of Mexico
[B] General Legal System
[1] General Issues
[a] Overview
[b] Strategic Sectors
[c] Exclusion of Foreign Investment
[d] Limited Foreign Investment Sectors
[e] Neutral Investments
[2] Investment Vehicles
[a] Overview
[b] Corporate Forms
[i] Sociedad Anónima
[ii] Sociedad de Responsabilidad Limitada
[iii] Fixed Versus Variable Capital
[iv] Filings
[v] Sociedad Anónima Promotora de Inversión
[c] Asociación en Participación
[d] Branch Office
[e] Mexican Real Estate Trust
[f] Mexican Energy and Infrastructure Trust
[C] General Tax Environment
[1] Most Recent Amendments
[2] Income Tax
[a] Tax Rate
[b] Taxable Basis
[i] Employee Profit Sharing
[ii] Net Operating Losses
[iii] Deductions
[iv] Depreciation of Assets, Amortization of Deferred Assets and Expenses
[v] Interest
[c] Tax Attributes
[i] CUFIN
[ii] Paid-in Capital
[d] Dividends
[e] Capital Redemptions
[f] Preferential Tax Regimes (Tax Havens)
[g] Taxation of Nonresidents
[3] Value Added Tax
[a] Tax Rate
[b] Creditable VAT
[4] Real Estate Transfer Tax
[5] Capital Taxes
[D] Characteristics Unique to Mexico
[1] Tax Treaties and Information Exchange Agreements
[a] Treaty Network
[i] Relief on Interest Withholding Rate
[ii] Relief on Capital Gains
[iii] Reorganizations
[b] Broad Agreements for the Exchange of Information
II Taxable Acquisitions and Dispositions of Mexican Entity or Its Assets
[A] Sale and Purchase of Shares
[1] Consequences for Selling Stockholders
[a] Taxation on Mexican Transferors
[i] Income Tax
[ii] Value Added Tax
[b] Taxation on Nonresident Transferors
[i] Income Tax
[2] Consequences for Acquirer
[a] Appraisals in Transactions Involving Nonresidents
[B] Sale and Purchase of Assets
[1] Implications for the Seller
[2] Implications for Purchaser
[C] Treatment of Contingent Purchase Price/Contingent Liabilities
[1] Income Tax
[2] Value Added Tax
[D] Allocation of Purchase Price
[E] VAT and Other Transfer Taxes
[1] Transfer of Shares
[2] Transfer of Assets
III Tax-Free Acquisitions and Dispositions
[A] Types and Requirements
[B] General Consequences and Objectives
[1] Sale of Shares Using Tax Basis as Price
[2] Merger
[a] Tax-Free Merger
[b] Tax Attributes
[c] Transfer of Assets
[d] Tax Integration Effects
[e] Real Estate Tax
[C] Cross-Border Transfers
[1] International Reorganization
[2] Tax Treaty Reorganizations
[a] Mexico-US Tax Treaty Protocol
[b] Mexico-Netherlands Tax Treaty Reorganization
[c] Mexico-Spain Tax Treaty Reorganization
[d] Requirements for Implementation
[3] Tax Haven Reorganization
[D] Transfer Taxes
[E] Issues of Special Concern in Mexico
IV Tax Attribute Preservation and Usage
[A] Change in Ownership Impact on Tax Assets
[B] Allocation of Compensation and Other Deductions Between Pre- and Post-closing Periods
[C] Any Other Issues of Special Concern in Mexico
V Due Diligence and Contractual Tax Protection
[A] Overview
[1] VAT Due Diligence
[2] Income Tax Due Diligence
[B] Tax Indemnifications and Other Contractual Provisions
VI Financing and Debt Pushdown Strategies
[A] Leveraging the Taxable Acquisition, Including Cross-Border Aspects
[1] Considerations
[2] Equity Financing
[3] Withholding on Interest Payments
[4] Reclassification of Interest Payments and Back-to-Back Loans
[5] Thin Capitalization
[6] 30% EBITDA
[7] Transfer Pricing
[8] Disclosure Obligations
[B] Debt Pushdown Strategies
[C] Other Ways of Maximizing Tax Deductibility of Interest and Acquisition Expenses
VII Dealing with Compensation Plans
[A] Treatment and Issues in M&A Context
[B] Any Other Issues of Special Concern in Mexico
VIII Grouping
[A] Requirements
[B] Consequences and Advantages
[C] Departure of Group Member
IX Planning with Intangible Property
[A] Local Regime (If Favorable)
[B] Treatment of Transfers Offshore and Licensing Back (If Local Regime Is Unfavorable)
[C] Any Other Issues of Special Concern in Mexico
X Internal Restructuring Involving Mexican Target
XI Target Breakup or Other Disposition of Unwanted Assets
XII Demergers
[A] Domestic Treatment and Issues
[1] Tax-Free Spin-Off
[2] Transfer of Tax Attributes
[3] Transfer of Assets
[B] Cross-Border Treatment and Issues
[C] Any Other Issues of Special Concern in Mexico
XIII Subsidiary Liquidations
[A] Domestic Treatment and Issues
[B] Cross-Border Treatment and Issues
[C] Any Other Issues of Special Concern in Mexico
XIV Joint Venture
[A] Structuring, Treatment and Issues in a Cross-Border Context
[B] Any Other Issues of Special Concern in Mexico
XV Equity and Debt Restructuring
[A] Debt Modifications
[B] Equity Modifications
[C] Any Other Issues of Special Concern in Mexico
XVI Corporate Expatriations
[A] Inbound Migrations
[1] Legal Considerations
[2] Tax Considerations
[3] Exit Taxes
[B] Outbound Migration
XVII Business Restructurings
XVIII Mexican Corporation as Acquisition Vehicle for Foreign Target
The Netherlands
I Introduction
[A] General Legal System
[B] General Tax Environment
[1] Corporate Tax
[a] Base and Rate
[b] Preventing Double Taxation
[c] Interest Deductions
[d] Tax Attributes
[e] Recent Changes and Changes under Consideration
[2] Dividend Withholding Tax
[3] Dutch Revenue
[C] Types/Classification of Major Business Entities
[1] Main Dutch Business Entities
[2] Taxation of Main Dutch Business Entities
[3] Other Dutch Business Entities
[4] Classification of Foreign Entities
II Taxable Acquisitions and Dispositions
[A] Sale and Purchase of Shares
[1] Consequences for Selling Shareholders
[a] Seller Is a Dutch Tax-Resident Company
[b] Seller Is an Individual Resident in the Netherlands
[i] Box 1
[ii] Box 2
[iii] Box 3
[c] Seller Is a Non-resident Company or Individual
[2] Consequences for Acquiror
[a] Acquiror Is a Dutch Tax-Resident Company
[i] Corporate Tax
[ii] Dividend Withholding Tax
[b] Acquiror Is a Non-Dutch Resident Company
[i] Corporate Tax
[ii] Dividend Withholding Tax
[3] Tax Consequences to the Dutch Target Company
[a] Corporate Tax
[b] Other Taxes
[c] Post-acquisition Restructuring of the Dutch Target
[B] Sale and Purchase of Assets
[1] Taxable Purchase of Dutch Business Assets of a Dutch Target Company
[a] Consequences for Seller/Dutch Target
[b] Consequences for Acquiror
[2] Taxable Purchase of Assets of a Non-Dutch Target Company
[a] Consequences for Seller/Non-Dutch Target
[b] Consequences for Acquiror
[C] Treatment of Contingent Purchase Price/Contingent Liabilities
[D] Allocation of Purchase Price
[E] VAT and Other Transfer Taxes
[1] Sale and Purchase of Shares
[a] VAT
[b] Real Property Transfer Tax
[2] Purchase of Dutch Business Assets
III Tax-Free Acquisitions and Dispositions
[A] Types and Requirements
[1] Business Merger
[2] Legal Merger and Legal Demerger
[a] Facility at the Level of the Merging/Demerging Entities
[b] Facility at the Level of the Shareholders
[3] Share Merger
[B] General Consequences and Objectives
[C] Cross-Border Transfers
[D] Dutch Real Property Transfer Tax
[1] Business Merger
[2] Legal Merger and Demerger
IV Attribute Preservation and Usage
[A] Change in Ownership Impact on Tax Assets
[1] Availability of Loss Compensation
[2] Use of Pre-2012 Claims for Exempt Foreign PE Profits and Foreign Tax Credit Carryforwards
[B] Any Other Issues of Special Concern in the Netherlands
V Due Diligence and Contractual Tax Protection
[A] Due Diligence
[B] Tax Indemnification
[C] Tax Treatment of Indemnity Payments
VI Financing and Debt Push-Down Strategies
[A] Leveraging the Taxable Acquisition, Including Cross-Border Aspects
[1] General
[2] Article 10a CTA: Anti-base Erosion Provisions
[3] Article 10b CTA: Low or No-Yield Loans
[4] Article 15b CTA: Earnings Stripping Rule
[B] Debt Push-Down Strategies
[C] Other Ways of Maximizing Tax Deductibility of Interest and Acquisition Expenses
VII Dealing with Compensation Plans
[A] Treatment and Issues in M&A Context
[1] General
[2] Rollover Provisions under Dutch Tax Law
[a] Wage Tax
[b] (Personal) Income Tax
[3] Cash-Out of Existing Plan
[a] Wage Tax
[b] (Personal) Income Tax
[c] Severance Payments
[B] Any Other Issues of Special Concern in the Netherlands' Current Deductibility Rules for Equity-Based Compensation
VIII Grouping
[A] Requirements
[B] Consequences and Advantages
[C] Departure of Group Member
[1] General
[2] Seller Is a Dutch Tax-Resident Company
[3] Tax Consequences to the Dutch Target Company
IX Dutch Tax Rules Relating to R&D
[A] General
[B] Local Regimes
[1] Innovation Box
[a] Qualifying Business Assets
[i] Self-Developed Intangible Business Assets
[ii] Distinction Between 'SMEs' and 'Other Taxpayers'
[b] The Innovation Box Election
[c] Qualifying benefits
[d] Effective Corporate Tax Rate of 9%
[i] Lower Tax Base
[ii] 'Threshold' for Development Costs
[iii] Losses from Intangible Assets
[e] International Context
[f] Using the Innovation Box in Practice
[i] Methods Used
[ii] Tax Rulings
[iii] Administrative Obligations
[2] R&D Wage Tax Credit
X Internal Restructuring Involving Dutch Target
[A] Treatment of Assets That Qualify under the Dutch Participation Exemption Regime
[B] Treatment of Assets That Do Not Qualify under the Dutch Participation Exemption Regime
XI Target Break-Up or Other Disposition of Unwanted Assets
[A] General
[B] Alternatives for Acquiring Part of the Assets of a Dutch Target
XII Demergers
[A] Domestic Treatment and Issues
[B] Cross-Border Treatment and Issues
XIII Subsidiary Liquidations
[A] Domestic Treatment and Issues
[1] Corporate Law Aspects
[2] Tax Consequences of a Liquidation
[a] Gains and Losses for the Liquidating Subsidiary
[b] Tax Treatment of the Shareholder in the Liquidated Subsidiary
[B] Cross-Border Treatment and Issues
[C] Any Other Issues of Special Concern in the Netherlands
XIV Joint Ventures
[A] Structuring, Treatment and Issues in Cross-Border Context
[1] Structuring
[2] Treatment and Issues in Cross-Border Context
[a] Tax Treatment of the Contributions to the Joint Venture
[b] Tax Treatment of the Joint Venture Income
[i] Tax Transparent Joint Venture
[ii] Corporate Joint Venture
[c] Tax Treatment of a Discontinuation of the Joint Venture
XV Equity and Debt Restructuring
[A] Debt Modification
[1] Write-Off and Waiver of Debt
[2] Purchase by a Debtor of Own Debt
[3] Conversion of Debt into Indebtedness on Different Terms
[4] Conversion of Debt into Equity
XVI Corporate Expatriations
[A] General
[B] Exit Taxation
[1] Domestic Legislation
[C] Inversions
XVII Business Restructurings
XVIII Dutch Corporation as Acquisition Vehicle for Foreign Target
[A] General
[B] Dutch Participation Exemption
[1] General
[2] Five Per cent Ownership Requirement
[3] General: Motive Test, Asset Test or Taxation Test
[a] Motive Test
[b] Asset Test
[c] Taxation Test
[4] Credit System If Participation Exemption Does Not Apply
[C] Controlled Foreign Company Legislation
[D] Dutch Anti-hybrid Mismatch Rules
[E] Dutch Treaty Network
[F] Tax Liability for Shareholder(s) of Dutch Acquisition Vehicle
[G] Dividend Withholding Tax
Spain
I Introduction
[A] General Legal System
[B] General Tax Environment
[C] Characteristics Unique to Spain
II Taxable Acquisition and Dispositions
[A] Asset Purchase and Share Purchase
[1] Asset Deals
[a] Liabilities
[b] Step-Up in Tax Basis of Asset
[c] Third-Party Finance
[d] Other Considerations
[2] Share Purchase
[B] VAT and Other Transfer Taxes
[1] Asset Deal
[2] Share Deal
[C] Holding Company Structures Commonly Used to Invest in Spain
[1] Using the Spanish Holding Company to Invest Outside Spain
[a] Conditions for Applying the ETVE Regime
[b] Taxation at the Level of the Spanish Holding
[i] Exemption on Dividends
[c] Tax Deduction of Expenses and Capital Losses
[d] Tax Treatment of ETVEs' Nonresident Shareholders
[i] Dividends Distributed by ETVEs
[ii] Transfer of ETVEs' Shares
[D] Treatment of Contingent Purchase Price/Contingent Liabilities
[1] Beneficiary of the Payments Deriving from Breach of Tax Warranties
[2] Tax Treatment of the Payments for Breach of Tax Warranties
[3] Succession of Responsibilities in Share and Asset Deals: Certificate from Tax Authorities
III Tax-Free Acquisitions and Dispositions
[A] Introduction
[B] Principles of the Spanish Tax Deferral Regime
[1] The Tax Deferral Effect: Rolling Over the Tax Basis and Holding Period of the Assets Contributed
[2] Territoriality Limitations in Cross-Border Reorganization Transactions
[3] Universal Succession and Transfer of Carried Forward Tax Losses under Reorganization Transactions
[a] Universal Succession of Tax Rights and Obligations
[b] Transfer of Carried Forward Tax Losses under Reorganization Transactions
[4] Applicability of the Tax Deferral Regime to Other Taxes
[C] Types and Requirements
[1] Merger
[2] Full Demerger
[3] Partial Demerger
[4] Contribution of a Branch of Activity (In-Kind Contribution)
[5] Share-for-Share Mergers
[6] In-Kind Contributions
[7] Transfer of SE and SCE Registered Offices Between Member States
[D] Other Issues
[1] Anti-avoidance Provision
[2] Compliance
IV Attribute Preservation and Usage
[A] Change in Ownership Impact on Tax Assets
V Due Diligence and Contractual Tax Protection
[A] Due Diligence
[B] Tax Indemnification and Other Contractual Provisions
[1] Usual Content of Tax Warranties
VI Dealing with Compensation Plans
[A] Treatment and Issues in an M&A Context
[1] Compensation Paid to Dismissed Employees
[2] Incentives to Retain Company Key Staff Members
[B] Other Issues
[1] Stock Options
[2] Pension Commitments
[3] Changes in Remuneration
[4] Carried interest
VII Financing and Debt Pushdown Strategies
[A] Leveraging the Taxable Acquisition, Including Cross-Border Aspects
[1] Thin Capitalization Rules
[2] Arm's Length Interest Rate
[3] Profit-Sharing Loans
[4] FX Considerations
[5] Taxation on Interest Paid to Nonresidents
[6] Hybrid Mismatches
[B] Debt Pushdown Strategies
VIII Planning with Intangibles
[A] Local Regime: Spanish IP Tax Regime
[B] Treatment of Transfers Offshore and Licensing Back
[1] Transfer of Intangibles
[2] License of Intangibles
[3] EU Directive
[4] Abolition of Taxation on Gross Income: Effect in an EU Context
[5] Cost-Sharing Agreements
IX Grouping
[A] Requirements
[1] Legal Form
[2] Tax Residence
[3] Shareholding and Controlling Company
[B] Consequences and Advantages
[C] Departure of Group Member
X Internal Restructuring Involving Spanish Target Generally
XI Target Breakup or Other Disposition of Unwanted Assets
XII Tax-Free Demergers
XIII Subsidiary Liquidations
[A] Domestic Treatment and Issues
[1] Taxation of Wound-Up Entities
[2] Taxation of Shareholders
[a] Capital Tax
[b] Corporate Income Tax
[c] Personal Income Tax
[d] Nonresident Income Tax
[B] Cross-Border Treatment and Issues
[1] Corporate Resident Shareholders
[2] Individual Resident Shareholders
XIV Joint Ventures
[A] Partnerships
[B] Foreign Partnerships
[C] Other Issues
[1] Temporary Grouping of Entities
[2] Participation Account
XV Equity and Debt Restructuring
[A] Debt Modifications
[B] Equity Modifications
XVI Corporate Redomiciliation
[A] Redomiciliation of a Spanish Company to Another EU Member State
[B] Cross-Border Merger Versus Transfer of Company Seat
XVII Business Restructuring
XVIII Spanish Corporation as Owner or Acquisition Vehicle for Foreign Business
[A] Direct Foreign Tax Credit
[B] Indirect Foreign Tax Credit
[C] Foreign Tax Credits under Spanish Tax Treaties
[D] Spanish-CFC Rules
[E] Portfolio Depreciation
[F] Goodwill Depreciation
Sweden
I Introduction
[A] Overview of Sweden
[B] General Legal System
[1] Legal Forms Available in Sweden
[a] Limited Liability Company
[i] Private Limited Liability Company
[ii] Public Limited Liability Company
[b] Partnerships
[c] Economic Association
[d] European Company
[e] Branch of a Foreign Corporation
[f] Sole Proprietorship
[C] General Tax Environment
[1] Anti-avoidance Rules
[a] Controlled Foreign Corporation
[b] The Anti-tax Evasion Act
[c] The "Transparency" Doctrine
[D] Characteristics Unique to Sweden
II Taxable Acquisitions and Dispositions
[A] Treatment of Seller and of Target Entity
[1] General
[2] Closely Held Companies
[3] Shell Companies
[4] Share-for-Share Exchange of Stock
[5] Sale and Purchase of Partnership Interests
[a] Consequences for Individual Partners
[b] Consequences for Corporate Partners
[B] Sale and Purchase of Stock
[1] Consequences for Corporate Stockholders
[a] General
[b] The Participation Exemption
[c] Shell Companies
[C] Sale and Purchase of Assets
[1] General
[2] Price Below Fair Market Value
[3] Tax-Free Reorganizations
[D] Treatment of Contingent Purchase Price/Contingent Liabilities
[E] Allocation of Purchase Price
[F] VAT and Other Transfer Taxes
III Tax-Free Acquisitions and Dispositions
[A] Types and Requirements
[1] Acquisitive Reorganizations
[a] Mergers
[i] Target Shareholder Consequences
[b] Asset-for-Share Exchange
[2] Incorporation/Contribution Transfers
[a] Incorporation
[b] Tax-Free Asset Contributions
[B] General Consequences and Objectives
[C] Cross-Border Transfers
[D] Transfer Taxes
[E] Issues of Special Concern in Sweden
IV Attribute Preservation and Usage
[A] Change in Ownership Impact on Tax Assets
[B] Allocation of Compensation and Other Deductions Between Pre- and Post-closing Periods
[1] Tax Loss Carryforward
V Due Diligence and Contractual Tax Protection
[A] Due Diligence
[B] Tax Indemnifications and Other Contractual Provisions
VI Financing and Debt Pushdown Strategies
[A] Debt Financing
[1] Limitations on Interest Deductibility
[B] Shareholders' Contributions
[C] Profit-Sharing Debentures
[D] Participating Debentures
[E] Withholding Tax
[F] Income Tax Treaty Requirements for Eligibility for Reduced Withholding Tax Rates
[G] Leveraging the Taxable Acquisition, Including Cross-Border Aspects
[H] Debt Pushdown Strategies
VII Dealing with Compensation Plans
[A] Treatment and Issues in M&A Context
[1] Employee Stock Option and Other Compensation Plans
[a] Bonus Schemes
[b] Restricted/Unrestricted Employee Securities
[B] Other Issues of Special Concern in Sweden
VIII Grouping
[A] Requirements
[B] Consequences and Advantages
[C] Departure of Group Member
IX Planning with Intangibles
[A] Local Regime (If Favorable)
[1] Royalty
[B] Other Issues of Special Concern in Sweden
X Internal Restructuring Involving a Swedish Target
XI Target Breakup or Other Dispositions of Unwanted Assets
XII Demergers
[A] Domestic Treatment and Issues
[1] Complete Demerger
[2] Partial Demerger
[B] Cross-Border Treatment and Issues
XIII Subsidiary Liquidations
[A] Domestic Treatment and Issues
[B] Cross-Border Treatment and Issues
[C] Any Other Issues of Special Concern in Sweden
XIV Joint Ventures
[A] Structuring, Treatment and Issues in Cross-Border Context
[B] Any Other Issues of Special Concern in Sweden
XV Equity and Debt Restructuring
[A] Debt Modifications
[B] Equity Modifications
[C] Any Other Issues of Special Concern in Sweden
[1] Share Buybacks
[2] Reduction of Share Capital
[3] Composition
XVI Corporate Expatriations
XVII Business Restructurings
XVIII Swedish Corporation as Acquisition Vehicle for Foreign Target
[A] Holding Companies
[1] Participation Exemption
[2] Dividend
[3] Capital Gains
Switzerland
I Introduction
[A] Overview of Switzerland
[B] General Legal System
[1] Political Institutions
[2] Swiss Legislation and Decision-Making
[C] General Tax Environment
[1] Corporate Income Tax
[2] Corporate Capital Tax
[3] Withholding Tax
[4] Group Companies
[D] Characteristics Unique to Switzerland
[1] Intercantonal Tax Allocation
[2] Double Tax Treaties
II Taxable Acquisitions and Dispositions
[A] Treatment of Seller and Target Entity
[1] General Considerations
[2] Sale of Assets by a Corporate Taxpayer
[3] Sale of Shares by a Corporate Taxpayer
[B] Treatment of the Purchaser
[1] Asset Purchase
[2] Share Purchase
[C] Treatment of Contingent Purchase Price/Contingent Liabilities
[D] Allocation of Purchase Price
[E] VAT and Other Transfer Taxes
[1] Value Added Tax
[a] Asset Deal
[b] Share Deal
[2] Securities Transfer Duty
[3] Real Estate Transfer Tax
[4] Other Taxes and Fees
III Tax-Free Acquisitions and Dispositions
[A] Types and Requirements
[1] Merger
[a] In General
[b] Tax Consequences for Shareholders
[i] Income from Participations from Private Assets
[ii] Income from Participations Held as Business Assets
[c] Tax Consequences for Merging Companies
[2] Upstream Merger
[3] Downstream Merger/Reverse Merger
[4] Quasi-Merger
[5] Demerger
[a] Description
[b] Tax Considerations
[6] Asset Transfer
[a] Description
[b] Tax Considerations
[B] Cross-Border Transfers
[1] In General
[2] Cross-Border Mergers
[a] Immigration (Inbound) Merger
[b] Quasi-Merger
[c] Expatriation (Outbound) Merger
[3] Cross-Border Demergers
[C] Transfer Duties
[1] Issuance Stamp Duty/Securities Transfer Duty
[2] Value Added Tax
[a] Notification Procedure
[b] Acquisitions and Dispositions Within a VAT Group
[c] Transaction with Non-VAT Group Members
[d] VAT Issues with Cross-Border Restructuring
[i] Export Out of Switzerland
[ii] Import to Switzerland
[e] Transfer Duties on Real Estate
IV Attribute Preservation and Usage
[A] Change in Ownership Impact on Tax Assets
[1] Loss Carryforwards
[2] Old Reserves Theory
[B] Allocation of Payments and Deductions Between Pre- and Post-Closing Periods
V Due Diligence and Contractual Tax Protection
[A] Due Diligence
[B] Tax Indemnifications and Other Contractual Provisions
[1] Asset Deal
[a] Tax Representations and Warranties
Tax Indemnities
[b] VAT Notification Procedure
[2] Share Deal
[a] Standard SPA Tax Clauses
[b] Other Contractual Provisions
[i] Indirect Partial Liquidation Clause
[ii] Indemnity for Old Reserves
[iii] Swiss VAT Grouping
VI Financing and Debt Pushdown Strategies
[A] Debt Pushdown
[1] General Remarks on Leveraged Acquisitions
[2] Debt Pushdown in Case of Acquisitions Through SPVs
[B] Safe Harbor Interest Rates for Intragroup Financing
[1] In General
[2] Foreign Exchange Considerations
[C] Thin Capitalization Rules
[1] Overview
[2] Qualification of Debts
[3] Capitalization
[4] Arm's Length Interest Rate
VII Dealing with Compensation Plans
[A] Introduction
[B] Rollover of Existing Plan
[1] Equity Rights in an Employer Group Company and Unvested Listed Options
[2] Vested or Unlisted Options and Expectancies for Cash Payments
[3] Tax Ruling
[C] Cash-Out of an Existing Plan
[1] In General
[2] Transfer Restrictions
[D] Deductibility
[1] Target Company
[2] Acquisition Company
VIII Grouping
IX Planning with Intangibles
[A] Taxation of IP in Switzerland in General
[B] Transfer of Intangibles
X Internal Restructuring Involving Swiss Target Generally
[A] Motivation for Restructuring
[B] Restructuring Techniques
[C] Tax Treatment
[1] Corporate Income Tax
[2] Swiss Withholding Tax on Dividends
[3] Securities Transfer Stamp Duty
XI Target Breakup or Other Disposition of Unwanted Assets
[A] Background
[B] Techniques
[C] Tax Considerations
[1] General
[2] Pre- or Post-acquisition Spin-Off
XII Demergers
[A] Domestic Treatments and Issues
[1] Demerger
[a] Types of Demergers
[b] Direct Federal Tax: Corporate Income Tax
[c] Direct Federal Tax: Income Tax
[i] Income from Participations from Private Assets
[ii] Income from Participations from Business Assets
[d] Withholding Tax
[e] Issuance Stamp Duty
[f] Securities Transfer Stamp Duty
[2] Hive-Down of a (Partial) Business or of Business Assets to a Subsidiary
[a] Direct Federal Tax: Corporate Income Tax
[b] Withholding Tax
[c] Issuance Stamp Duty
[d] Securities Transfer Stamp Duty
[3] Hive-Down of Participations to a Subsidiary
[a] Direct Federal Tax: Corporate Income Tax
[b] Withholding Tax
[c] Issuance Stamp Duty
[d] Securities Transfer Stamp Duty
[B] Cross-Border Treatment and Issues
[1] Direct Federal Tax: Corporate Income Tax
[2] Direct Federal Tax: Income Tax
[a] Income from Participations from Private Assets
[b] Income from Participations from Business Assets
[3] Withholding Tax
[4] Issuance Stamp Duty
[5] Securities Transfer Stamp Duty
[C] Any Other Issues of Special Concern in Switzerland
[1] Asset Management and Holding Companies
[2] Financial and Intellectual Property Rights Companies
[3] Real Estate Company
XIII Subsidiary Liquidations
[A] Swiss Subsidiary Owned by Swiss Resident Shareholders
[1] Concept of Liquidation under Swiss Tax Law
[2] Corporate Income Tax and Capital Tax
[a] Overview of Dissolution of Swiss Subsidiaries
[b] Dissolution with Formal Liquidation
[3] Withholding Tax
[a] Tax Base
[b] Discharge of Withholding Tax Obligations
[i] By Way of Payment
[ii] By Application of the Notification Procedure
[4] Value Added Tax
[B] Swiss Subsidiary Owned by Non-Swiss Resident Shareholders
[1] Introduction
[2] Withholding Tax
[C] Other Issue of Special Concern in Switzerland: Liquidator's Liability
[1] Scope
[2] Withholding Tax
[3] Corporate Income Tax and Capital Tax
[4] Value Added Tax
XIV Joint Ventures
[A] Choice of Entity and Structure
[1] Non-entity JV (Cooperation Agreements, Consortia, Strategic Alliances, Etc.)
[2] JV as a Separate Legal Entity
[B] Domestic and Cross-Border JVs
[1] Domestic JVs
[2] Cross-Border JV
[C] Tax Consequences of Establishment of JV
[D] Ongoing Taxation of JV
[1] Treatment of Built-In Gain or Loss
[2] Indemnification Provisions
[3] Compensation Planning
[4] Allocation and Taxation of Operating Results
[5] Taxation of Distributions
[6] Double Taxation Relief
[E] Exit/Unwind Scenarios
XV Equity and Debt Restructuring
[A] Equity Restructuring (Recapitalizations)
[1] Issuance Stamp Duty
[2] Corporate Income Tax
[3] Dividend Withholding Tax
[B] Debt Modifications
[C] Consequences of Equity and Debt Restructuring at Shareholder Level
[D] Share Buybacks
[E] Repatriations
XVI Corporate Expatriations/Redomiciliations
[A] Preliminary Remarks, Motivation Factors
[B] Outbound Migration
[1] Migration of the Legal Seat
[a] Legal Framework
[b] Corporate Income Tax
[c] Withholding Tax
[2] Migration of the Place of Effective Management
[3] Taxation of Shareholders
[C] Inbound Migration
[1] Legal Framework
[2] Issuance Stamp Duty
[3] Corporate Income Tax
[4] Withholding Tax
[5] Ongoing Swiss Taxation of Migrated Company
XVII Business Restructurings
[A] Inbound Restructuring
[B] Outbound Restructuring
XVIII Swiss Corporation as Acquisition Vehicle for Foreign Target
United Kingdom
I Introduction
[A] General Legal System
[B] General Tax Environment
[C] Types/Classification of Major Business Entities
[1] Special Tax Regimes
[2] Main Rate of Corporation Tax
[3] Abbreviations
[4] Law as of December 2022
II Taxable Acquisitions and Dispositions
[A] Treatment of Seller, Buyer and Target
[B] Sale and Purchase of Shares and Assets
[1] Share Purchase
[a] Consequences for Seller: General
[b] Seller: Taxation of Gain/Loss - Territorial Limits
[c] Seller: Taxation of Gain/Loss - Computation
[d] Seller: Taxation of Gain/Loss - Substantial Shareholding Exemption (SSE)
[i] SSE Rules
[e] Seller: Use of Losses
[i] Losses to Reduce the Chargeable Gain
[ii] Use of Capital Losses
[f] Seller: Taxation of Gains - Planning to Reduce Gain
[g] Deferred and Contingent Consideration
[i] Ascertained Deferred Consideration
[ii] Contingent Consideration: Ascertainable (but Not Yet Ascertained)
[iii] Contingent Consideration: Unascertainable
[h] Consequences for Buyer: General
[i] Buyer: Chargeable Gains
[j] Buyer: Transfer Tax - General
[k] Buyer: Transfer Tax - Deferred and Contingent Consideration
[l] Buyer: Transfer Tax - Mitigation
[m] Consequences for Target
[2] Asset Purchase
[a] Background
[b] Seller: Taxation of Profit/Loss - Territorial Limits
[c] Seller: Taxation of Profit/Loss - Chargeable Gains Regime
[d] Seller: Taxation of Profit/Loss - Intangible Fixed Assets
[e] Seller: Taxation of Profit/Loss - Plant and Machinery
[f] Seller: Taxation of Profit/Loss - Loan Relationships and Derivative Contracts
[g] VAT
[h] Consequences for Buyer: General
[i] Buyer: Transfer Tax
[3] Deciding Between a Share Sale and Asset Sale
[a] Hive-Down of Business into Newco Before Sale
III Tax-Free Acquisitions and Dispositions
[A] Types and Requirements
[1] Sections 135, 136 and 138A TCGA 1992: Rollover Reliefs
[2] Section 135: Exchange
[3] Section 136: Reconstruction
[4] Section 138A: Earn-Out Relief
[5] Section 137 TCGA 1992: Anti-avoidance
[6] Section 139 TCGA 1992: Reconstruction
[7] Section 140 TCGA 1992: Incorporation of Non-UK Permanent Establishment
[8] Mergers under the EU Mergers Directives
[B] General Consequences and Objectives
[1] Qualifying Corporate Bonds and Non-qualifying Corporate Bonds
[C] Cross-Border Transfers
[1] Territorial Aspects
[2] Section 140C TCGA 1992: Transfer of Non-UK EU Permanent Establishment
[3] Section 140A TCGA: Transfer by EU Company of UK Permanent Establishment
[D] Transfer Taxes
[1] Stamp Duty and Stamp Duty Reserve Tax
IV Attribute Preservation and Usage
[A] Change in Ownership Impact on Tax Assets
[1] Background
[2] Trading Losses: Overview
[3] Trading Losses: Change in Ownership
[a] Background
[b] Meaning of 'Change in Ownership'
[c] Relevant Time Frame for 'Major Change in the Nature or Conduct of a Trade'
[d] Meaning of 'Major Change in the Nature or Conduct of a Trade'
[e] Activities Become Small or Negligible
[4] Capital Allowances: Overview
[a] Capital Allowances: Change in Ownership
[5] Capital Losses: Overview
[a] Capital Losses: Restrictions
[6] Companies with Investment Business
[a] Meaning of 'Significant Increase in the Amount of the Company's Capital'
[b] Effect of Restrictions
[B] Allocation of Compensation and Other Deductions Between Pre- and Post-closing Periods
[1] Group Relief: General
[a] Group Relief: Apportionment of Profits on Sale
[b] Arrangements
[2] Usability of Buying Company's Losses by Target and Target's Losses by Buyer
[C] Other Issues of Special Concern in the United Kingdom
[1] Asset/Business Sales: Overview
[a] Trading Losses
[b] Trading Losses: Seller's Position
[c] Trading Losses: Buyer's Position
[d] Capital Allowances
V Due Diligence and Contractual Tax Protection
[A] Due Diligence and Contractual Tax Protection
[1] Exit Charges
[2] Tax Returns
[3] Deferred Tax
[4] Tax Reliefs
[5] Potential Liabilities under Previous Sale Agreements
[6] VAT
[7] Post-closing Planning
[B] Contractual Protection: Tax Warranties and Tax Indemnity
[1] Conventional UK Approach to Contractual Tax Protection
[2] Tax Indemnity
[a] Scope
[b] Exclusions
[c] Limitations and Time Limit
[d] Overprovisions and Corresponding Benefits
[e] VAT
[f] Gross Up
[g] Conduct of Tax Affairs of Target
VI Dealing with Compensation Plans
[A] Treatment and Issues in M&A Context
[1] Key Considerations
[2] When Pay-Outs under the Compensation Plans Are Due
[3] How and When Income Tax and NICs Have to Be Accounted for to HMRC
[4] When Income Tax and NICs Are Due under Tax-Favoured Plans
[a] CSOPs
[b] SAYEs
[c] SIPs
[d] EMIs
[5] Corporation Tax Deductions and Payments under Compensation Plans
[6] Shares Required to Satisfy Compensation Plans
[7] New Compensation Plans after Transaction Has Been Completed
VII Financing and Debt Push-Down Strategies
[A] Leveraging the Taxable Acquisition, Including Cross-Border Aspects
[1] Acquisition Finance: Background
[2] Leveraging a UK Acquisition
[a] Background
[b] Group Relief
[3] Leveraging a Non-UK Acquisition
[a] Background
[4] Deductibility of Interest Expense
[a] Taxation under the 'Loan Relationships' Code
[b] Thin Capitalization Rules
[i] Special Relationship
[ii] Limit on Deductibility of Finance Costs
[iii] Advance Thin Capitalization Agreements
[iv] Transactions Within the UK Tax Net
[c] Recharacterization of Interest as a (Non-deductible) Distribution
[d] Limit on Deductions for Borrowing with Unallowable Purpose
[e] Corporate Interest Restriction
[f] Deferral of Deductions for Late-Paid Interest
[g] Structured Finance Arrangements Rules
[h] Anti-hybrid Rules
[5] UK Withholding Tax on Interest
[a] Background
[b] Domestic UK Exemptions
[c] Relief under Double Taxation Agreements
[d] Interest and Royalties Directive
[e] PIK Notes and 'Funding Bonds' Rules
[6] FOREX Considerations
[B] Debt Push-Down Strategies
VIII Grouping
[A] Requirements
[1] Background
[2] Tracing Group Relationships through Ordinary Share Capital
[3] Economic Ownership
[4] Voting Control
[5] Anti-avoidance Provisions
[6] Payments for Entering into Grouping Elections
[B] Consequences and Advantages
[1] Group Relief
[a] Group Relief and Consortium Relief: Background
[b] Group Relief: Losses
[c] Group Relief: Grouping Test
[d] Group Relief: Cross-Border
[e] Consortium Relief
[2] Chargeable Gains Grouping
[a] Chargeable Gains: Background
[b] Chargeable Gains: Degrouping
[c] Chargeable Gains: Grouping Election
[d] Chargeable Gains: Rollover
[e] Chargeable Gains: Shareholding Requirement
[3] Intangible Fixed Assets Grouping
[a] Intangible Fixed Assets: Background
[b] Intangible Fixed Assets: Degrouping
[c] Intangible Fixed Assets: Grouping Election
[d] Intangible Fixed Assets: Rollover
[e] Intangible Fixed Assets: Shareholding Requirement
[4] Loan Relationships and Derivative Contracts Grouping
[a] Loan Relationships and Derivative Contracts: Background
[b] Loan Relationships and Derivative Contracts: Degrouping
[c] Loan Relationships and Derivative Contracts: Shareholding Requirement
[5] VAT Grouping
[a] VAT: Background
[b] VAT: Eligibility
[c] VAT: Group Application
[6] Transfer Tax Groups
[a] Stamp Duty Land Tax
[i] Stamp Duty Land Tax: Shareholding Requirement
[ii] Stamp Duty Land Tax: Anti-avoidance
[iii] Stamp Duty Land Tax: Degrouping
[b] Stamp Duty and Stamp Duty Reserve Tax
[i] Stamp Duty: Shareholding Requirement
IX Planning with Intangibles
[A] Local Regime (If Favourable)
[1] Background
[2] Overview of UK Taxation of IP
[a] Intangibles Regime
[b] Reinvestment Relief
[c] R&D Credits
[d] Patent Box
[i] Qualifying IP
[ii] Eligibility
[iii] Relevant IP Profits
[iv] Electing into the Patent Box
[3] International Elements
[a] ORIP
[b] Withholding Tax
[c] Double Tax Agreements
[d] Migrating IP from the UK
[e] CFC Rules
[f] Transfer Pricing
X Internal Restructuring Involving UK Target
[A] Motivation for Restructuring
[B] Restructuring a UK Target with CFCs
[1] Tax on Transfer
[2] Transfer Consequences
XI Target Breakup or Other Disposition of Unwanted Assets
[A] General
[B] Structuring Strategies
[1] Tax-Efficient Unwanted Asset Transfers
[2] Replacing Business Assets
[3] Acquisition of Target Followed by a Hive-Up of Assets
[4] Hive-Down of Unwanted Assets
[C] Multiple Bidders
XII Demergers
[A] UK Treatment and Issues
[1] Demergers: Some General Concepts
[a] The Main Methods of Undertaking a Demerger
[b] 'Direct' and 'Indirect' Demergers
[2] Demergers: The Company Law Requirements
[a] Distribution in Specie
[b] Repayment of Capital
[c] What If There Are Insufficient Distributable Reserves/Share Capital?
[d] Section 110 Liquidation
[3] Achieving Tax-Free Status for a Demerger
[a] Demerger by Way of Distribution in Specie: 'Statutory Demergers' and 'Chargeable Payments'
[i] Statutory Demergers: Direct
[ii] Statutory Demergers: Indirect
[b] Demerger by Way of Reduction and Repayment of Capital: Indirect Only
[c] Demerger Pursuant to a Section 110 Liquidation
[d] The Cross-Border Dimension
[4] Demergers and Losses
[a] Change in Ownership
[b] Losses and Demergers of Assets
[c] Demergers and Group Relief
[5] Pre-demerger Reorganizations
[6] Compensation Plans
[a] Key Considerations
[b] How Are Pay-Outs under Compensation Plans Affected by the Demerger?
[c] Should Awards under Share-Related Compensation Plans Be Adjusted?
[d] New Compensation Plans after the Demerger Has Taken Effect
[7] Tax Sharing/Indemnification Provisions
XIII Subsidiary Liquidations
[A] Domestic Treatment and Issues
[1] Liquidation Within a Group of Companies
[2] Domestic Tax-Free Liquidation
[B] Cross-Border Treatment and Issues
[1] UK Company Liquidates into Non-UK Parent
[2] Non-UK Subsidiary Liquidates into UK Parent
[3] Non-UK Subsidiary Liquidates into Non-UK Corporation
XIV Joint Ventures
[A] Typical UK Joint Venture Structures
[1] Background
[B] Taxation and the Joint Venture
[1] Establishment of Joint Venture
[a] Corporation Tax on Chargeable Gains
[b] Asset Transfers
[c] Degrouping Charges
[d] Transfer Taxes
[2] Operation (Including Funding Costs and Managing Losses)
[a] Funding Costs
[b] Consortium Relief
[c] SSE
[3] Exit
XV Equity and Debt Restructuring
[A] Equity Modifications
[B] Debt Modifications
[1] Background: The 'Loan Relationships' Regime
[2] Debt Modifications Generally
[3] Debt Modifications: Creditor and Debtor Unconnected
[a] Release/Impairment
[b] Capitalization
[c] Deferral of Interest Payments, Extension of Maturity and Changes to Financial Covenants
[4] Anti-avoidance Rules Relevant to Debt Modifications
[a] General
[b] Unallowable Purposes
[c] Transfer Pricing
[d] Debt Buyback
[5] Differing Treatment If Debtor and Creditor Are Connected or in the Same Corporate Group
[a] Meaning of Connected
[b] Basic Symmetry Rule
[c] Exceptions to Symmetry Rule
[d] Use of Grouping Rules
XVI Corporate Expatriations
[A] Background: UK Tax Residence
[B] Change of Residence
[C] Exit Charges
[1] Exit Charge: Chargeable Gains
[2] Exit Charge: Intangible Fixed Assets
[3] Exit Charge: Loan Relationships
[4] Exit Charge: Derivative Contracts
[5] Exit Charge: Finance Act 2019 Reforms
[a] Eligibility
[b] Exit Charge Payment Plan
[c] Standard Instalment Method
[D] Redomiciliation
[E] Inward Migration
XVII Business Restructuring
XVIII UK Corporation as Acquisition Vehicle of Foreign Target
[A] UK Holding Company Regime
[1] UK Holding Company Regime: Background
[2] Qualifying Asset Holding Companies
[3] Foreign Entity Classification
[4] Dividend Exemption
[5] Double Tax Relief
[6] Controlled Foreign Companies (CFC) Rules
[a] Background to CFC Rules
[b] Reformed CFC Regime
[i] Definition of a CFC
[ii] Effect of CFC Rules
[iii] Carve-Outs
[iv] The 'Gateway'
[v] Exemptions
[7] Section 3 TCGA 1992 (Attribution of Gains to Members of Non-resident Companies)
[8] Substantial Shareholding Exemption
[a] SSE: Background
[b] SSE: The Reliefs
[9] International Movement of Capital Rules
[10] Transfer Taxes
[11] Structuring the Acquisition
[a] Financing
[b] Withholding Tax
[c] Repatriation of Profits
[d] Utilization of Losses
United States
I Introduction
[A] General Legal System
[B] General Tax Environment
[C] Types/Classification of Major Business Entities
[D] 2017 Tax Reform
[1] Overview
[2] The Participation Exemption
II Taxable Acquisitions and Dispositions
[A] Sale and Purchase of Shares
[1] Consequences for Selling Stockholders
[2] Consequences for Acquiror
[B] Sale and Purchase of Assets
[1] General
[2] Consequences for Seller
[3] Consequences for Acquiror
[4] Liabilities (Including Contingent Liabilities) That Have Not Yet Been Incurred
[a] Accrued Liabilities Not Yet Deductible by Seller
[b] Contingent Liabilities
[5] Special Consideration for Assets Sales Between Related Corporations
[C] Qualified Stock Purchase Treated as an Asset Sale: Section 338(h)(10)
[1] General
[2] Requirements for Section 338(h)(10) Election
[3] Tax Consequences of Section 338(h)(10) Election (Assuming Target Is Not an S Corporation)
[4] Section 338(h)(10) Transaction Involving Tiered Targets
[5] Timing of Inclusion of Liabilities (Including Contingent Liabilities)
[6] Adjustments to Purchase Price/Earn-Outs
[7] State Tax Treatment
[D] Qualified Stock Disposition Treated as an Asset Sale: Section 336(e)
[1] General
[2] Requirements for Section 336(e) Election
[3] Tax Consequences of Section 336(e) Election (Assuming Target Is Not an S Corporation)
[4] Section 336(e) Election Involving Tiered Targets
[E] Sale and Purchase of Partnership Interests
[1] General
[a] Partnership as Aggregate of Partners or as Entity
[b] Constructive Sale and Purchase of Partnership Interests
[2] Consequences for Seller
[a] Special Considerations for Foreign Partners
[3] Consequences for Acquiror
[4] Consequences for Continuing Partners
[F] Indemnification Payments by Seller
[G] Installment Sales and the Installment Method
[1] Properties for Which Installment Method Is Not Available
[2] Limitation on Obligations Qualifying for Installment Method
[3] Installment Method
[4] Transfer and Pledge of Installment Obligation by Seller
[5] Special Issues Involving Sales of Partnership Interests
[H] Treatment of Contingent Purchase Price: "Earn-Outs" and Escrows
[1] Treatment of Contingent Payment Sale under Installment Method
[2] Treatment of Contingent Payment Sale If Installment Method Not Applicable or Elected Out
[a] Acquiror Treated as Issuing a CPDI
[b] Open Transaction Treatment
[3] Treatment of Acquiror Issuing Contingent Obligations
[4] Escrow
[I] Allocation of Purchase Price
[1] Purchase Price Allocation in an Asset Sale
[2] Purchase Price Allocation in a Stock Sale with Section 338(h)(10) or Section 336(e) Election
[3] Purchase Price Allocation for Sale of Partnership Interest
[J] Corporate Expatriations (Section 7874)
[K] US Real Property Interests (FIRPTA)
[1] General FIRPTA Consequences
[2] Rules for Determining USRPHC Status
[a] Fair Market Value Test for Determining USRPHC Status
[b] Book-Value Test for Determining USRPHC Status
[3] Certification and Notice Requirements
[L] Reporting Regarding Taxable Acquisition or Disposition
[1] Broker Reporting
[2] Section 6043A Reporting
[3] FIRPTA and Section 1446(f) Reporting
[M] VAT and Other Transfer Taxes: Transfer (Conveyance) Taxes
III Tax-Free Acquisitions and Dispositions
[A] Types and Requirements: Section 368 Acquisitive Reorganizations
[1] Merger with Issuance of Shares of Surviving Entity (Type A)
[2] Forward Subsidiary Merger (Type A/a2D)
[a] General
[b] "Substantially All" Properties
[3] Reverse Subsidiary Merger (Type A/a2E)
[a] General
[b] "Control"
[c] "Voting Stock"
[4] Stock Solely for Voting Stock (Type B)
[5] Assets for Voting Stock (Type C)
[6] Related Party Assets for Stock (Type D)
[a] General
[b] "All Cash" Type D
[7] Mere Change in Form or Place of Organization (Type F)
[8] Bankruptcy/Insolvency Reorganization (Type G)
[B] Additional General Requirements for Section 368 Acquisitive Reorganizations
[1] Continuity of Shareholder Interest
[a] General
[b] Signing Date Rule If the Consideration Is Fixed
[c] COSI in Type D Reorganization
[2] Continuity of Business Enterprise
[3] Exchange of Net Value
[4] Plan of Reorganization/Business Purpose
[5] Transactions Involving Two or More Investment Companies (Section 368(a)(2)(F))
[C] Effect of Related Transactions on Qualification
[1] Historic Shareholders
[2] Push-Ups and Drop-Downs
[a] Pre-reorganization
[b] Post-reorganization
[3] Recharacterizations
[a] Authorities Recharacterizing Stock Transfer/Liquidation or Merger Transactions
[b] Reallocation of Built-In Gain or Loss
[c] Authority to Respect Form
[D] General Consequences and Objectives
[1] Target Corporation Consequences in Asset Acquisitions
[2] Acquiring Corporation Consequences in Asset Acquisitions
[a] No Gain or Loss Recognition
[b] Basis and Holding Period
[c] Carryover of Attributes Generally
[d] Carryover of Earnings and Profits
[e] Restriction on Carrybacks
[f] Close of Taxable Year
[g] Special Treatment of Type F Reorganization
[3] Acquiring Corporation Consequences in Stock Acquisition (Type B or Type A/a2E)
[a] No Gain or Loss Recognition
[b] Basis and Holding Period
[4] Target Shareholder Consequences
[a] Taxation Only of Boot: Gain Limitation
[b] Character as Gain or Dividend
[c] Tax Basis and Holding Period
[E] Reporting Requirements for Section 368 Reorganizations
[1] Reporting under Section 1.368-3
[2] Broker Reporting
[3] Section 6043A Reporting
[F] Section 351 (Incorporation/Contribution) Transfers
[1] Applications
[2] Requirements for Qualification
[a] General
[b] No Continuity Requirements
[c] Transfers to "Investment Companies"
[d] Business Purpose
[e] Interaction with Section 304
[3] Consequences for Transferors
[4] Consequences for Corporate Transferee
[5] Multiple Drop-Downs
[6] Intentional "Breaking" of Section 351 Transaction
[7] Reporting Requirements for Section 351 Transfers
[G] Acquisitions by Entities Treated as Partnerships
[H] US Person Transfers Stock in US Corporation to Foreign Corporation (Outbound Stock Reorganization)
[1] Overview
[2] Issues under the 50% Ownership Limitation and the 50% Control Group Limitation
[a] Treatment of Stock Options
[b] US Ownership Presumption
[3] Issues under the Substantiality Test
[a] Measure of Value
[b] Effect of Passive Assets on Value
[4] Meeting the 50% Ownership Limitation and Substantiality Test Where Foreign Acquiror Is Smaller than US Target
[a] Meeting the 50% Ownership Limitation
[b] Meeting the Substantiality Test
[5] Gain Recognition Agreements
[6] US Parent Transfers Stock in US Subsidiary to Foreign Corporation
[7] Indirect Stock Transfers: Outbound Triangular Reorganizations of US Target and Asset Drop-Downs
[a] Indirect Stock Transfers: Treatment of US Transferor
[b] Coordination Rule with Asset Transfer
[8] Reporting Requirements
[I] US Person Transfers Stock in Foreign Corporation to Foreign Corporation or US Corporation (Foreign-to-Foreign or Inbound Stock Transfer)
[1] Application of Section 367(a)
[a] Inbound Stock Reorganization
[b] Outbound Stock Reorganization
[2] Application of Section 367(b)
[a] Inbound Stock Reorganization
[b] Foreign-to-Foreign Stock Reorganization
[c] Foreign-to-Foreign Transfer by a Foreign Corporation with Section 1248 Shareholders
[d] Anti-abuse Rules
[3] Application of Section 367(b) in Conjunction with Section 367(a)
[a] General
[b] Exclusive Application of Section 367(b) to Certain Triangular Reorganizations
[4] Reporting Obligations
[J] US Person Transfers Assets to Foreign Corporation for Stock
[1] Incorporation of Foreign Branch
[a] General
[b] Loss Recapture Rules Applicable to the Transfer of a Foreign Branch
[c] Reporting Obligations
[2] Outbound Asset Reorganization
[a] General Rule
[b] Additional Rules Applicable to Transfers of Stock or Securities by a Domestic Corporation to a Foreign Corporation in Connection with an Asset Reorganization
[c] Distribution of Stock of Foreign Acquiror to Shareholders of US Transferor
[d] Reporting Obligations
[K] Foreign Corporation Transfers Assets to US Corporation for Stock (Inbound Asset Reorganization)
[1] Income/Gain Recognition by Exchanging Shareholders
[2] Tax Attributes of Foreign Transferor
[L] Foreign Corporation Transfers Assets to Foreign Corporation for Stock (Foreign-to-Foreign Asset Reorganization and Section 351 Transfers)
[1] Foreign-to-Foreign Asset Reorganization
[a] Treatment of Transferring Corporation
[b] Treatment of Exchanging Shareholders
[2] Foreign-to-Foreign Section 351 Transaction
[M] Issues of Special Concern in the US
[1] Corporate Expatriations (Section 7874)
[2] US Real Property Holding Company Target in Otherwise Tax-Free Transaction
[3] Corporate Alternative Minimum Tax
[4] Excise Tax on Stock Buybacks
[N] Indirect Taxes Including Transfer (Conveyance) Taxes
IV Attribute Preservation and Usage
[A] Change in Ownership Impact on Tax Assets (Sections 382 and 383)
[1] Overview
[2] Section 382 Limitation
[3] Testing for Ownership Change
[a] Treatment of Options and Other Instruments as Stock or Nonstock
[b] NOL Shareholder Rights Plans
[4] Rules for Built-In Items
[5] Special Rules for Bankruptcy and Insolvency Situations
[a] Title 11 Exception
[b] Alternative to the Title 11 Exception
[c] Consequences of Treating Stock as Worthless
[d] Protections in Case of Chapter 11 or Similar Proceedings
[6] Administrative and Legislative Actions Relating to Sections 382 and 383 in Response to the 2008 Financial Crisis
[B] NOL Limitations When Corporations Become New Members of Consolidated Groups
[1] Application of Section 382 to Consolidated Groups
[2] SRLY Limitation
[3] Loss Carrybacks to Pre-consolidation Taxable Years
[4] Lonely Parent Rule
[C] Section 269(a) Disallowance of Tax Benefits for Certain Tax Avoidance Acquisitions
[1] Principal Purpose Determination
[2] Section 269(a) Override of Section 382
[3] Deductions Accrued after the Acquisition
V Due Diligence and Contractual Tax Protection
[A] Due Diligence
[B] Tax Indemnification
VI Financing and Debt Pushdown Strategies
[A] General
[B] Common Law Thin Capitalization Rules and Statutory Limitations on the Deductibility of Interest
[1] Debt Versus Equity
[a] Debt/Equity Case Law
[b] Debt/Equity in Related Party Context under Section 385
[2] Parent Guarantee: True Borrower
[3] Earnings Stripping Limitations under Section 163(j)
[4] Sections 163(e)(3) and 267(a)(3): Original Issue Discount Acrrued to Related Persons
[5] Arm's Length Interest Rate
[6] Sections 163(e)(5) and 163(i): Disqualified Interest Portion on Certain High Yield Obligations
[C] US Withholding Tax
[1] Domestic Law Exemptions
[2] Income Tax Treaty Relief
[a] "Interest" Versus Dividends
[b] Four-Part Inquiry for Treaty Relief
[D] Income Tax Treaty Requirements for Eligibility for Reduced Withholding Tax Rates
[1] Residence
[2] Fiscally Transparent (Hybrid) Entities: Income "Derived by a Resident"
[a] FTE Provisions in Treaties
[b] Code Section 894(c) Regulations
[c] Section 1441 Withholding Regulations
[3] LOB Articles
[a] General Rules (US Model Treaty)
[b] Derivative Benefits Provisions
[c] Headquarters Test
[d] Branches and Permanent Establishments in Third Countries
[4] Beneficial Owner/Conduit Financing Regulations
[a] General
[b] Conduit Financing Regulations
[E] Base Erosion and Anti-abuse Tax
[F] Hybrid Entities and Double-Dip Planning
[1] General
[2] Dual Consolidated Loss (Section 1503(d))
[3] Disallowance of Deduction in Certain Deduction/No Income Transactions (Section 267A)
VII Dealing with Compensation Plans
[A] Rollover of Existing Plan
[B] Cash-Out of Existing Plan
[1] General
[2] Target Included in Seller's Consolidated Return
[C] Current Deductibility Rules for Other Acquisition-Related Compensation
[1] Simplifying Convention for Employee Compensation
[2] Employee Severance Costs
[3] Retention Agreements for Transition Period
[D] Assumption of Pension or Deferred Compensation Obligations
[E] Restricted Stock: Addition of Employment Restrictions to Stock Received in Exchange for Target Stock
[F] Effect of Restricted Stock and Stock Options on Corporate Transactions and Ownership Tests
[G] Golden Parachute Rules
VIII Grouping
[A] Requirements
[B] Consequences and Advantages
[C] Departure of a Member
IX Planning with Intangibles
[A] IP Holding Company
[B] Migration
[1] General
[2] Cost Sharing
[3] Licenses
[4] Services
X Internal Restructuring Involving US Target
[A] Motivation for Restructuring
[B] Certain Traps to Beware in Restructuring
[C] Restructuring of US Target with CFCs
[1] Relevance of Section 338(h)(10) Election
[2] Restructuring Techniques
[3] Negotiated Acquisition
XI Target Breakup or Other Disposition of Unwanted Assets
[A] General Issues
[B] Strategies
[1] Transfer If High Basis Assets
[2] Installment Sale
[3] Leveraged Partnership
[4] Like-Kind Exchanges
[5] Pre-acquisition Spin-Off
[6] Conversion to S Corporation
XII Demergers
[A] Requirements Generally
[1] Business Purpose
[2] Distribution of "Control": Section 355(a)(1)(A) and (D)
[3] The Device Test: Section 355(a)(1)(B)
[4] Five-Year Active Trade or Business: Section 355(b)
[5] Continuity of Shareholder Interest
[6] Continuity of Business Enterprise
[7] Disqualified Investment Corporations: Section 355(g)
[8] "Disqualified Distributions" Following Purchase of Distributing or Controlled Stock: Section 355(d)
[9] Transfer of Controlling Interest in Distributing or Controlled as Part of Spin-Off Plan: Section 355(e)
[B] Taxable Boot and "Hot Stock" in Otherwise Qualifying Transaction
[1] Taxable Boot
[2] Hot Stock
[C] Moving Liquidity from Controlled to Distributing and Planning in Respect of Debt Securities
[D] Tax Basis
[1] General Rule
[2] Rule Where Distributing Is a CFC (Section 367(b))
[E] Allocation of Earnings and Profits Between Distributing and Controlled
[1] General
[2] Special Rules Applicable to Section 355 Transactions Involving CFCs
[F] Adjustment of Existing Equity-Based Compensation Plans
[G] Section 355 Reporting
[H] Outbound Section 355 Distributions
[1] Gain Recognition If Foreign Controlled: Nonrecognition If Domestic Controlled
[2] Presumption of Status and Rebuttal Mechanism
[3] Basis to Distributees
[4] Reporting
[I] Corporate Alternative Minimum Tax Considerations
XIII Subsidiary Liquidations
[A] Taxable Liquidation
[B] Domestic Tax-Free Liquidation
[C] US Company Liquidates into Foreign Parent
[1] General Rules
[2] Exceptions to Taxable Treatment
[a] US Trade or Business Property Exception
[b] USRPI Exception
[c] Exception for Distribution of 80% Owned Domestic Subsidiary
[d] General Anti-abuse Rule
[e] Distributee's Basis and Other Attributes
[f] Reporting
[D] Foreign Subsidiary Liquidates into US Parent
[1] Income/Gain Recognition Rules
[2] Distributee's Basis and Other Attributes
[E] Foreign Subsidiary Liquidates into Foreign Corporation
[1] Income/Gain Recognition Rules
[2] Distributee's Basis and Other Attributes
XIV Joint Venture
[A] Structuring Considerations
[1] Choice of Vehicle: Partnership Versus Corporation
[2] Issues of Direct Foreign Partner in Partnership with US Business
[3] Targeted (Tracking) Interests in JV
[4] Dual JV Structure
[5] Partnership Anti-abuse Rules (General)
[B] Transfer of Assets to Partnership
[1] Avoiding Gain Recognition on Drop-down of Assets and Liabilities
[2] Transfer of Assets/Stock to Partnership Having Foreign Partner
[3] Planning for Transfer of IP: Some Alternatives
[4] Partnership Interest for Services
[5] Reporting Regarding Acquisitions and Organizations
[6] Reportable Transactions
[C] Capital Accounts, Profit and Loss Shares and Tax Accounts
[1] Capital Accounts
[2] Guaranteed Payments
[3] Section 704(b) Allocations of Partnership Items
[4] Section 704(c) Allocations of Built-In Items
[a] General Rules in Respect of Contributed Property
[b] Rules Following Revaluations (Reverse Section 704(c) Allocations)
[5] Section 197 Anti-churning Rules
[D] Accounting for Liabilities and Distributions: Disguised Sales
[1] Partner's Share of Partnership Liabilities
[2] Distributions and Deemed Distributions, Including in Excess of Basis
[3] Disguised Sale Rules
[E] FTC Utilization
[1] Separate Baskets
[2] Allocation of Certain Foreign Income Taxes for FTC Purposes
[3] FTC Utilization: Debt Issues
[4] "OFL" Issues
[F] FX Considerations for Partnership or Branch Operations Using Functional Currency Different Than Owner
[1] Translation Rules for Income and Loss of Section 987 QBU
[2] FX Consequences of Transfers from Section 987 QBU to Its Owner
[a] 2016 Regulations and the FEEP Method
[b] 1991 Proposed Regulations
[G] Subpart F and GILTI Inclusion Regime in Respect of Partnerships
[1] Partner and Partnership Level Determination of CFC Status
[2] General Overview of Subpart F Approach to Partnerships
[3] Foreign Personal Holding Company Income
[a] Partnership Derives FPHCI
[b] Partnership Pays FPHCI to CFC Partner
[4] FBC Sales Income
[a] Partnership Derives Potential FBC Sales Income
[b] Certain Sales Between CFC Partner and Partnership
[c] CFC Partner's Affiliate Sells to Partnership and Partnership Sell to Unrelated Party: Branch Rule Risk
[d] Partnership Manufactures: Partnership Sales Branch
[5] Partnership Derives Potential FBC Services Income
[6] Issues Regarding Investment in "US Property" (Section 956)
[H] Reporting in Respect of Operations
[I] Exit Considerations
[1] Sale and Other Exit Alternatives Generally
[2] Exit: Section 754 Election/Section 734 or 743 Adjustment
[3] Exit: Section 708(b)(1)(B) Deemed Termination No Longer Applies
[4] Exit: Anti-mixing Bowl Rules
[5] Exit: FX Gain or Loss Issues
[6] Sale of Partnership Interest by CFC
[7] Reporting re Exit
XV Equity and Debt Restructuring
[A] Modification of Terms of Debt (Debt Recapitalizations)
[1] Consequences Generally
[2] Issuer Consequences
[3] Holder Consequences
[a] Consequences on Exchange in Type E Reorganization
[b] Consequences Outside Type E Reorganization Context
[B] Modification of Terms of Equity (Equity Recapitalizations)
[1] Consequences
[2] Disguised Dividend and Section 306 Stock
[C] Share Buybacks
[D] Demise of the Repatriation Dilemma?
XVI Corporate Expatriations
[A] Scope
[B] Conditions and Operation
[C] Anti-stuffing and Anti-stripping Rules
[D] Direct or Indirect Acquisition of Substantially All of Properties
[E] Domestic Entity Owners Own 60%/80% of the Shares of the Foreign Acquiring Corporation
[1] General Rule
[2] Special Rules Excluding Certain Stock
[3] Disregard of Certain Stock Attributable to Foreign Acquiring Corporation Passive Assets
[4] Stock of the Foreign Acquiring Corporation Attributable to Certain Prior Domestic Entity Acquisitions
[5] Stock Issued in Third-Country Transactions
[6] Examples
[F] Substantiality of Business Activities in Foreign Country
[G] Taxation of Inversion Gain of Surrogate Foreign Corporation (60%-80% Owner Continuity)
[H] Excise Tax on Specified Stock Compensation of Insiders
XVII Business Restructuring
XVIII US Corporation as Acquisition Vehicle for Foreign Target
[A] Key Tax Regime Features Relevant to US Corporation as Owner of Foreign Business or Assets
[1] General
[2] CFC Regime
[a] Overview
[b] Subpart F Income
[c] Income Attributable to Intangibles
[i] Global Intangible Low-Taxed Income (Section 951A)
[ii] Foreign Derived Intangible Income (Section 250)
[iii] Some Observations
[d] Deemed Repatriation of Earnings (Section 956)
[e] Hybrid Dividends by Lower-Tier CFCs (Section 245A(e))
[f] Disposition of Shares of CFC (Section 1248)
[3] Passive Foreign Investment Companies
[4] Disregarded Entities
[5] FTC Regime
[a] General
[b] Worldwide Foreign-Source Income Limitation Applied to Separate Limitation Categories (Baskets)
[c] OFL and Overall Domestic Loss (ODL)
[6] Exit Tax on Outbound Transfers
[B] Taxable Acquisition of Foreign Target
[1] US Tax Consequences to Holders
[2] US Tax Consequences to US Acquiror
[C] Tax-Free Acquisition of Foreign Target by US Acquiror
[1] Inbound Stock Acquisition
[2] Inbound Asset Acquisition
[D] Tax-Free Merger or Other Reorganization of Two CFCs
[E] Financing the Acquisition
[1] Identification of Parties to the Financing
[a] General Considerations in Identification of Ultimate Borrower
[b] General Considerations in Identification of Lender
[c] Push-Down of Debt
[2] Allocation of Interest Expense for US FTC Regime
[a] General Rule
[b] CFC Netting Rule
[c] CFC-Level Allocation of Expense
[3] FTC Consequences of Debt Financing in Certain Settings
[a] FTC Consequences of Interest Payments Made by CFC to US Group
[b] FTC Consequences of Interest Payments Made by CFC to Another CFC

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