International TaxIf you are a U.S. person or entity with operations abroad, or a foreign person or entity with operations in the U.S., you are confronted with numerous international tax issues. GTC can provide a full range of tax services for business and individual international tax clients. Please contact us to discuss the international tax services that we can provide to you as a potential client of our firm.
The primary international tax issues for which GTC provides advice to clients are summarized below:
- Structuring International Transactions and Investments
- Transfer Pricing Issues
- Interpreting U.S. Tax Treaties
- Advising on Withholding Tax Issues
- Structuring and Evaluating Financial Products
If your organization is planning a cross-border transaction or investment, you must deal with a complex body of interrelated 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 organization’s choice of entities can be critical to your success and the “check-the-box” rules offer significant tax planning opportunities in an international context. The international context also amplifies the importance of careful tax 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 tax rules.
GTC advises taxpayers on tax-efficient structuring of cross-border investments, including optimal use of tax treaties, foreign tax credits, tax deferral, and entity classifications. GTC also advises business entities with international operations on the tax aspects of cross-border reorganizations, as well as the year-by-year management of international tax exposures.
If your organization is planning an international transaction or investment, GTC can offer your organization each of the following services:
- Advise on choice of entity issues,
- Help your organization choose the most tax-efficient foreign situs consistent with your business needs,
- Prepare corporate/trust/partnership documents and form the necessary entities,
- 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.
If your organization has cross-border dealings with related parties, you are likely aware that transfer pricing enforcement is a “hot button” issue and a high audit priority for U.S. and foreign taxing authorities. Section 482 of the Internal Revenue Code gives the IRS broad discretion to reallocate income by requiring taxpayers to support the transfer prices charged between entities and can make it challenging for taxpayers to overcome proposed transfer pricing adjustments.
GTC can assist you with the various stages of a transfer pricing dispute, including IRS examination, IRS appeals, litigation, and the APA process. The types of intercompany transfers for which GTC can provide representation include the manufacture and distribution of tangible goods, the development, sale, or licensing of intangibles, the incidental or regular provision of related-party services, and the making of intercompany loans. GTC has experience with section 6662 transfer pricing penalty protection documentation, as well as with the drafting of cost-sharing agreements for international groups.
Interpreting U.S. Tax Treaties
The large and growing U.S. tax treaty network makes it likely that your organization could be entitled to benefits under one or more of the 50-plus U.S. tax treaties. Understanding and working with these treaties requires experience, because U.S. tax treaties differ from each other in important, and often subtle, respects.
GTC’s tax treaty practice covers both substantive legal issues and the administrative aspects of securing treaty benefits by filing appropriate forms or working with U.S. and foreign government officials. GTC and its network of other tax professionals are familiar with most of the U.S. tax treaties currently in effect.
If you are operating in a foreign jurisdiction within the U.S. tax treaty network, GTC can offer your organization each of the following services:
- Ensure your eligibility for potential treaty benefits,
- Structure your operations in order to maximize the value of treaty benefits,
- Advise on treaty interpretation and whether treaty provisions will apply to your specific transaction, and
- Ensure that you satisfy any filing or information reporting requirements necessary to take advantage of treaty benefits.
If you are a foreign corporation or individual investing in the United States or a U.S. company making payments to foreign persons, it is likely that the recently-issued U.S. nonresident alien withholding regulations affect you. These new rules are quite complex, and the consequences for failure to comply with their substantive or documentation requirements may be harsh. The withholding rules cannot be considered in a vacuum; you also need to understand how they interact with tax treaty provisions and with various anti-abuse rules, such as the “conduit” regulations.
GTC has familiarity with all substantive and procedural aspects of the withholding rules. If you are a foreign corporation or individual investing in the United States, GTC can help you understand the rules, structure your investments to eliminate or minimize withholding tax, and satisfy the complicated documentation requirements. If you are a U.S. withholding agent, GTC can help you comply with your withholding obligations and avoid exposure to withholding liability. The services that GTC and its network of tax professionals can provide on withholding tax issues include each of the following:
- Analyze how the withholding rules apply to your facts,
- Structure your investments so as to eliminate or minimize withholding,
- Analyze how treaties impact your withholding obligations,
- Determine whether and how the conduit rules may affect your withholding obligations,
- Ensure that you comply with relevant regulation requirements, and
- Negotiate a Qualified Intermediary agreement with the IRS on your behalf.
Companies involved in creating or purchasing financial products know that such products, designed correctly, can provide competitive returns and aid in risk management while also providing creative solutions to a variety of tax concerns. This has made financial products an area of dynamic growth, particularly in the international setting where their value is frequently enhanced through the use of hybrid entities and hybrid transactions (i.e., entities and transactions that are characterized differently for U.S. and foreign tax purposes), as well as through the use of a variety of notional principal contracts, repos, and other features. With the growth in this area, however, has come intense IRS and legislative scrutiny, thereby placing a premium on ensuring that a financial product is carefully designed from the outset.
If you are structuring or evaluating cross-border financial products, GTC can offer each of the following services:
- Evaluate existing financial product designs to determine whether they will accomplish U.S. tax objectives,
- Advise on alternative designs to maximize U.S. tax benefits and the likelihood of achieving them,
- Prepare relevant transaction documents (e.g., partnership agreements, swap agreements, and confirmations, etc.),
- Prepare and file documents to organize appropriate U.S. entities (e.g., LLC formations) and assist in engaging local international counsel in forming certain foreign entities, and
- Advise on the potential applicability of tax shelter registration, disclosure, and list maintenance requirements.