Praxis des internationalen Steuerrechts 2015

Anhang 3

The International Tax Journal

November-December 2014

(Vol. 40, No. 6)

A Note From the Editor-in-Chief

By Lowell D. Yoder

„Inversion”: A Cross-Border Acquisition Structure

A structure currently being used by U.S. corporations to acquire a foreign corporation is colloquially referred to as an „inversion.” The resulting structure is a new foreign parent that owns the U.S. corporation and the foreign target.

To illustrate, assume a U.S. publicly-traded corporation intends to acquire a foreign corporation. Typically, a new foreign corporation is formed in a country with flexible corporate laws and beneficial tax rules (e.g., the U.K., Ireland, or the Netherlands). The shareholders of the U.S. corporation and the shareholders of the foreign target effectively transfer their shares to the new foreign corporation in exchange for stock. The shareholders of the foreign target may also receive cash.

In addition to important non-tax business reasons underlying the combination transaction, a foreign-parented structure is compelling for tax reasons. The U.S. has the highest corporate tax rate (approximately 40%) of any developed country. It is ...