International Tax
McDermott Will & Emery has a strong focus on international tax matters, having for more than 50 years continuously represented a wide range of multinational clients around the world. While the legal practice of most of our tax lawyers includes international tax matters, several dozen focus specifically on international tax law. We also work regularly with members of the McDermott International Tax Panel (ITP), a network of premier tax professionals in numerous jurisdictions around the world.
Our International Tax Practice covers the range of all international business activities and taxes. We provide ongoing advice to U.S.-based multinational businesses concerning all U.S. federal and state income tax rules relevant to foreign operations, as well as general advice concerning non-U.S. taxation, in particular the applicable tax regimes in China, Germany, Italy and the United Kingdom. We advise from the inception of business operations in a foreign country to the disposition of a business. We have provided advice concerning business activities in every industrialized country, as well as most of the emerging countries.
Structuring Operations
We work extensively with our clients on overseas business structures for start-up and expanded operations. This includes structuring distribution and purchase arrangements overseas that avoid foreign taxation. We advise concerning structures of sales and manufacturing operations in foreign countries to maximize the beneficial tax use of losses and to minimize taxation of transfers of assets outside the United States. In addition, we structure operations maximizing opportunities for deferral of U.S. tax on foreign earnings. In this regard, we consider the classification for U.S. tax purposes of various foreign entities (such as corporations, partnerships and branches). We structure operations throughout the world, with a particular emphasis on European countries, Canada, Mexico and South America. We also have substantial experience in structuring operations in the Russian Federation, as well as in the People’s Republic of China, Hong Kong, Korea, Singapore, Australia and South Africa.
We routinely advise our clients about the special federal income tax rules that apply to U.S. businesses operating abroad—including, for example:
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McDermott’s international tax lawyers are on the cutting edge of new tax planning ideas around the world, due to the diversity of our client base and the number of multinational corporations we serve. In addition, we stay abreast of current law changes and opportunities around the world through frequent communication with correspondent law firms on our International Tax Panel.
Reduction of Worldwide Tax Rate
We also advise clients about ways to reduce their worldwide effective tax rates to the extent possible under applicable laws. Some of our techniques include leveraging foreign subsidiaries to reduce foreign taxes, revamping intercompany pricing and royalty payments, contract manufacturing and other principal structures, cross-border leasing transactions and increasing low-taxed foreign source income to utilize excess foreign tax credits. In this regard, we work with clients to develop capital structures and repatriation strategies for minimizing worldwide taxation.
Special Purpose Foreign Entities
We also advise clients on ways to utilize funds in foreign affiliates while minimizing U.S. and foreign taxation. Our advice includes the organization of special purpose foreign entities, such as Netherlands/Swiss finance entities, Netherlands/Netherlands Antilles finance entities, Irish finance entities, currency trading and hedging centers, central warehouse and distribution facilities and headquarter-type offices, and back-office facilities in different geographic locations worldwide. We also work extensively on international financing matters, including international leasing transactions (e.g., cross-border leasing of aircraft and large machinery), international financing transactions (e.g., parallel loans, securities loans, back-to-back loans, Japanese four-sided Kagonuke loans and Samurai bonds) and various other planning ideas for moving funds across borders with minimal cost and maximum flexibility.
Foreign Acquisitions and Dispositions
We structure and negotiate acquisitions and dispositions of foreign companies, planning for the most tax efficient structures from both non-U.S. and U.S. business and tax viewpoints. Typical issues include stock versus asset purchases, foreign or United States ownership and the form of business entity. Acquisition planning ideas include leveraged holding companies to reduce foreign taxes and maximize cash flow flexibility and elections to treat certain stock purchases as asset acquisitions.
Restructuring Foreign Operations
As a result of changes in business climates, we are routinely called on to give advice concerning restructuring existing foreign operations, with a focus on tax planning. This can involve sizing down a business, changing the country of operation or converting to a pass-through entity to obtain tax benefit for foreign losses. To meet our client’s objectives, we obtain tax rulings and work with other counsel to obtain all necessary rulings and clearances where we do not have our own offices.
Intercompany Pricing
We have extensive experience handling intercompany pricing issues in the United States, China and the European Union, from a planning standpoint and when there is a controversy with the relevant taxing authority. We routinely provide our multinational clients with advice concerning transfers of intangibles to foreign affiliates, services and intercompany transfer pricing matters, and have obtained advance pricing agreements in various jurisdictions. When intercompany pricing issues are raised by a taxing authority, we defend our clients at all stages of the administrative process. Our approach is to seek favorable settlements at the administrative level and to avoid litigation if possible. We have been involved in the preparation of detailed pricing reports, which require economic analyses and industry experts, as well as the development of strategies to best present our client’s position and the case to the taxing authority (and, if necessary, in court). To advance our client’s interests, we work with senior economists and pricing specialists at major accounting and economic consulting firms.
Non-U.S. Tax Advice & McDermott’s International Tax Panel
We routinely provide general non-U.S. tax advice to our clients who rely on our offices outside the United States, particularly in the United Kingdom, Italy, Germany and China, as well as McDermott’s ITP. The panel, consisting of tax professionals in more than 20 countries throughout Asia Pacific, Africa, Europe, Latin America, the Middle East and North America, is managed by central contacts at McDermott. Members have been selected based on years of experience of working together sharing mutual clients, and with the intention of providing clients with a service level consistent with that of McDermott when a project involves jurisdictions in which the Firm does not operate its own offices. The McDermott ITP allows us the flexibility of selecting the best lawyer in a particular location for the type of work required.
For a detailed list and information about the members on the McDermott ITP, including representative experience and contact information, visit our website at: taxpanel.mwe.com.
Contacts
- David G. Noren
+1 202 756 8256
Send E-mail - Carlo Maria Paolella
+39 06 462024 1
Send E-mail
Tax Client Services
- Accounting Methods
- Aircraft Acquisition and Operation
- Capital Markets Tax
- Captive Insurance and Reinsurance
- Closely Held Business
- Cooperatives
- Energy Tax
- Financial Products, Trading & Derivatives
- Insurance Companies and Products Tax
