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Structuring International Transactions, Operations, and Investments
Caplin & Drysdale
Structuring International Transactions, Operations, and Investments

If you are planning a cross-border transaction, operation, or investment, you must deal with a daunting array of U.S. tax rules. The structure you choose will have both immediate and long-term tax consequences, some of which are direct and obvious and others of which are indirect and hidden. Your choice of entities can be critical to your success and the "check-the-box" rules offer considerable planning opportunities in an international context. The international context also magnifies the importance of careful planning for corporate reorganizations because you not only must comply with the complex corporate reorganization rules, but you also must address outbound transfer, disposition, and other special rules.

At Caplin & Drysdale, structuring international transactions, operations, and investments is an active segment of our practice. We advise taxpayers on tax-efficient structuring of cross-border investments, including optimum use of tax treaties, foreign tax credits, tax deferral, and entity classifications. We also advise companies with established international operations on the tax aspects of cross-border reorganizations, as well as the year-by-year management of international tax exposures.

Representative Engagements

  1. A U.S. company with several foreign subsidiaries, some of which were losing money in foreign jurisdictions, found that it could not offset such losses against taxable profits it was earning in other jurisdictions.

    Result: Caplin & Drysdale developed a restructuring plan that made use of a European holding company, hybrid operating entities, and modified intercompany pricing policies to reduce the client's total foreign taxes while optimizing the utilization of foreign tax credits on its U.S. return.

  2. A U.S. multinational proposed a billion-dollar acquisition of a company with a complementary product line and an existing international structure. 

    Result: Caplin & Drysdale developed a tax efficient structure for the acquisition and a strategy for meshing the combined operations without adverse tax consequences, and we obtained tax rulings in several countries to ensure that the strategy would be respected by the relevant tax authorities.

  3. A large multinational wished to undertake a series of transactions involving loan repayments, capital contributions, and purchases of common and preferred stock involving more than a dozen corporate entities and culminating in a $200 million purchase of stock in a U.S. corporation. 

    Result: Caplin & Drysdale helped the company choose a structure that would achieve its business objectives while optimizing its worldwide tax position, including advice on how to structure the transaction so that it would not be characterized as acquisition of United States property under section 956.

Our Services

If you are planning an international transaction, operation, or investment, Caplin & Drysdale can:

  • Advise on choice of entity issues;
  • Help choose the most tax-efficient foreign situs consistent with your business needs;
  • Prepare corporate/trust/partnership documents and form entity;
  • Review foreign tax credit status and design credit-optimization strategies;
  • Obtain advance rulings to ensure approval by relevant tax authorities;
  • Aid with restructuring as business considerations or foreign tax rules change; and
  • Work to ensure that acquisitions, dispositions, and expansions are achieved in the most tax-efficient manner.
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