The New Landscape for Inversions: IRS and Treasury Change the Rules

September 30, 2014

The Internal Revenue Service (“IRS”) and Treasury Department issued Notice 2014-52 (the “Notice”) targeting corporate inversions on September 22, 2014 (the “Notice Date”) in the U.S. Tax considerations are important for inversion transactions, as they may allow an inverted U.S. multinational to access cash and earnings of its foreign subsidiaries, earnings often designated as permanently reinvested earnings for financial accounting purposes (so-called "trapped cash"). The Notice implements a two-prong strategy to be implemented in future regulations. One prong would limit post-inversion tax planning, including the ability of the new foreign parent in a partial inversion to access trapped cash on a tax efficient basis. The other prong would broaden the rules which determine whether an inverted company is subject to the rules designed to prevent inversions.

Read "The New Landscape for Inversions: IRS and Treasury Change the Rules."