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Category Archives: International Taxation

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Recent Legislative Proposals and IRS Guidance on the Taxation of Digital Assets

This blog post summarizes recent federal bills that have been introduced (but not yet passed), proposals by the Biden Administration, and guidance issued by the Internal Revenue Service with respect to the taxation of digital assets. Summary of the Guidance: The Responsible Financial Innovation Act (the “RFIA”) introduced in Congress by Senators Cynthia Lummis (R-WY) … Continue Reading

New Proposed Regulations Would Impact the Determination of Domestically Controlled REIT and Structures for Sovereign Wealth Funds’ US Real Estate Investments

On December 28, 2022, the Internal Revenue Service (the “IRS”) and the Treasury Department released proposed regulations (the “Proposed Regulations”) under sections 892 and 897 of the Internal Revenue Code (the “Code”).[1] If finalized as proposed, the Proposed Regulations would prevent a non-U.S. person from investing through a wholly-owned U.S. corporation in order to cause … Continue Reading

EU Commission publishes draft directive to remove tax driven debt-equity bias

Summary and Background On 11 May 2022, the European Commission (the “Commission”) published its draft proposal for a debt-equity bias reduction allowance (“DEBRA” or, the “Directive”), which forms part of the Commission’s Communication on Business Taxation reforms which were first outlined on 18 May 2021.  The Directive seeks to remove tax as a weighted factor … Continue Reading

The Biden Administration Proposes Changes to the U.S. International Tax Rules

Introduction and Summary On March 28, 2022, the Biden Administration proposed changes to the U.S. international tax rules. In short, the Biden Administration proposed to: Enact a 15% minimum “undertaxed profits rule” (a “UTPR”) to replace the “Base Erosion Anti-Abuse Tax” (“BEAT”), and a 15% “qualified domestic minimum top-up tax” (a “QDMTT”). These proposals are … Continue Reading

Proposed Regulations Regarding the Aggregate Treatment for Pass-Through Owners of PFIC Stock

On January 25, 2022, the Internal Revenue Service (the “IRS”) and the Department of the Treasury (“Treasury”) released regulations (the “Final Regulations”) finalizing provisions in prior proposed regulations which generally would treat domestic partnerships as aggregates of their partners (rather than as entities) for purposes of determining income inclusions under the Subpart F provisions applicable … Continue Reading

Senator Manchin Announces That He Will Not Support the Build Back Better Act – Where Things Stand Now

Today, December 19, 2021, Senator Joe Manchin (D., W.Va.) said that he opposes the Build Back Better Act, which effectively prevents its passage.  While there are no immediate prospects for the Build Back Better Act to become law, future tax acts tend to draw upon earlier proposals.  With a view to future tax proposals, this … Continue Reading

130 countries join the OECD’s framework for international tax reform

Significant progress has been made in the efforts of the OECD to reach international consensus on the BEPS 2.0 proposals. Broadly, the proposals are aimed at addressing challenges relating to taxation of the modern digital economy. The 139 country OECD Inclusive Framework meeting concluded on 1 July 2021, with 130 countries and jurisdictions, representing in … Continue Reading

Comparison of the Biden Administration and Senate Finance Committee International Tax Proposals

On March 31, 2021, the Biden administration released a factsheet for the “Made in America Tax Plan”.  On April 5, 2021, Senate Finance Chair Ron Wyden (D-Ore.) and Senators Sherrod Brown (D-Ohio) and Mark Warner (D-Va.) released “Overhauling International Taxation: A framework to invest in the American people by ensuring multinational corporations pay their fair … Continue Reading

Extension of FBAR Filing Deadline for Certain Filers

On December 9, 2020, the Financial Crimes Enforcement Network (“FinCEN”) issued Notice 2020-1, extending the filing deadline for the Report of Foreign Bank and Financial Accounts, FinCEN Form 114 (FBAR), for certain individuals with signature or other authority over (but no financial interest in) employer-owned foreign financial accounts to April 15, 2022. FinCEN has provided … Continue Reading

Section 1446(f) Final Regulations: Key Changes to Guidance on Non-Publicly Traded Partnership Interest Transfers by Non-U.S. Persons

On October 7, 2020, the U.S. Internal Revenue Service (“IRS”) and Treasury Department released final regulations[1] providing guidance on the rules imposing withholding and reporting requirements under the Code[2] on dispositions of certain partnership interests by non-U.S. persons (the “Final Regulations”). The Final Regulations expand and modify proposed regulations[3] that were published on May 13, … Continue Reading

Cayman Islands added to the EU blacklist of non-cooperative jurisdictions for tax purposes

On 18 February 2020, the ECOFIN committee of finance ministers of the EU resolved to add the Cayman Islands to the EU blacklist of non-cooperative jurisdictions for tax purposes. Their reasoning was short: “[The] Cayman Islands does not have appropriate measures in place relating to economic substance in the area of collective investment vehicles.” This … Continue Reading

Extension of FBAR Filing Deadline for Certain Filers

On December 20, 2019, the Financial Crimes Enforcement Network (“FinCEN”) issued Notice 2019-1, extending the filing deadline for the Report of Foreign Bank and Financial Accounts, FinCEN Form 114 (FBAR), for certain individuals with signature or other authority over (but no financial interest in) employer-owned foreign financial accounts to April 15, 2021. FinCEN has provided … Continue Reading

IRS provides very modest relief from downward attribution resulting from the repeal of section 958(b)(4)

On October 2, 2019, the Internal Revenue Service (“IRS”) and the U.S. Department of the Treasury (the “Treasury”) issued Revenue Produce 2019-40 (the “Revenue Procedure”) and proposed regulations (the “Proposed Regulations”) that provide guidance on issues that have arisen as a result of the repeal of section 958(b)(4) by the tax reform act of 2017.[1] … Continue Reading

Proposed Regulations Provide Clarity for Qualified Foreign Pension Fund Exception

On June 7, 2019, the U.S. Treasury Department (“Treasury”) and the Internal Revenue Service (“IRS”) released proposed Treasury regulations under Sections 897, 1445 and 1446 (the “Proposed Regulations”) regarding the exception for qualified foreign pension funds (“QFPFs”) from taxation under the Foreign Investment in Real Property Tax Act (“FIRPTA”) provisions of the Internal Revenue Code … Continue Reading

Final IRS Regulations Sync Section 956 with TCJA Participation Exemption – Limits “Deemed Dividends” for U.S. Corporate Shareholders of CFCs

Implements 2018 Proposed Regulations, ending most limitations on investments in U.S. property, as well as pledges and guarantees by CFCs wholly-owned by U.S. corporations – also provides PTI guidance for CFC shareholders. EXECUTIVE SUMMARY In anticipated and important guidance, the U.S. tax authorities have issued final regulations under I.R.C. Section 956 (the “New 956 Regulations”).[1] The New … Continue Reading

Section 1446(f) Proposed Regulations: Key Guidance on Partnership Interest Transfers by Non-U.S. Persons

On May 13, 2019, the U.S. Internal Revenue Service (“IRS”) and Treasury Department published proposed regulations providing guidance on the rules imposing withholding and reporting requirements under the Code[1] on dispositions of certain partnership interests by non-U.S. persons (the “Proposed Regulations”). The Proposed Regulations expand and in important ways modify earlier Notice 2018-29[2] on dispositions … Continue Reading

Proposed FDII Regulations under Section 250

I.                   Introduction. On March 4, 2019, the Internal Revenue Service (the “IRS”) and the Department of the Treasury (the “Treasury”) released proposed regulations (the “Proposed Regulations”) regarding the deduction for “foreign-derived intangible income” (“FDII”) under section 250 of the Internal Revenue Code.[1] Section 250 was enacted in 2017 as part of the tax reform act.[2] … Continue Reading

Extension of FBAR Filing Deadline for Certain Filers

On December 4, 2018, FinCEN issued Notice 2018-1, extending the filing deadline for the Report of Foreign Bank and Financial Accounts, FinCEN Form 114 (FBAR), for certain individuals with signature or other authority over (but no financial interest in) employer-owned foreign financial accounts to April 15, 2020. FinCEN has provided similar extensions over the previous … Continue Reading

Proposed Anti-Hybrid Regulations under Sections 267A, 245A, and 1503(d)

On December 20, 2018, the Internal Revenue Service (the “IRS”) and the Department of the Treasury (the “Treasury”) released proposed “anti-hybrid” regulations (the “Proposed Regulations”) under sections 267A, 245A(e), and 1503(d) of the Internal Revenue Code.[1] Sections 267A and 245A(e) were enacted in 2017 as part of the tax reform act.[2] Very generally, these sections … Continue Reading

FATCA: Significant Relief in New Proposed Regulations

On December 13, 2018, the Internal Revenue Service (the “IRS”) and the U.S. Department of the Treasury (the “Treasury”) issued proposed regulations (the “Proposed Regulations”) addressing various aspects of the withholding and information reporting regime commonly referred to as “FATCA”.[1] The Proposed Regulations provide significant relief from potential withholding and compliance burdens that U.S. and non-U.S. … Continue Reading

U.S. Tax Reform: IRS Proposes Interest Deduction Limitation Regulations

On November 26, 2018, the Internal Revenue Service (the “IRS”) and the U.S. Department of the Treasury (the “Treasury”) issued proposed regulations (the “Proposed Regulations”) under section 163(j) of the Internal Revenue Code (the “Code”).[1]  Section 163(j) limits the deductibility of net business interest expense to 30% of “adjusted taxable income” plus “floor plan financing … Continue Reading

Impact of Proposed Regulations under Section 956 on Lending Arrangements Involving U.S. Corporate Borrowers

Introduction On October 31, 2018, the U.S. Treasury Department (“Treasury”) and the Internal Revenue Service (the “IRS”) proposed new regulations (the “Proposed Regulations”)[1] that are likely to allow many controlled foreign corporations (“CFCs”)[2] of U.S. multi-national borrowers to guarantee the debt of their parents and to allow the U.S. parent to pledge more than 66 … Continue Reading

New Repatriation Tax Relief for RICs and Foreign Income Guidance for REITs

On September 6, the Internal Revenue Service (“IRS”) released Revenue Procedure 2018-47 (the “RIC Rev Proc”), which provides that a repatriation deemed to have been received by a registered investment company (a “RIC”) under Section 965 (enacted as part of the 2017 tax reform act, commonly known as the “Tax Cuts and Jobs Act” or … Continue Reading
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