Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
U.S. Corporate Tax Perspective Fueling Inversion Deals
Author: Scarinci Hollenbeck, LLC
Date: March 28, 2014
Key Contacts
Back
As the U.S. tax climate – which is already one of the most stringent in the developed world – threatens to grow harsher, the corporate world is seeing an uptick in so-called “inversion” deals, according to Law360.
Companies that undergo inversions effectively give up their U.S. citizenship in order to move overseas – typically, into countries with lower corporate tax rates. Experts are predicting that deals structured in this way will continue to increase amid uncertainty in the future of U.S. tax law.
In a recent high-profile inversion deal, Chiquita Brands International Inc. structured its acquisition of Irish rival Fyffes PLC as a merger, allowing the company to effectively move to the lower-taxed country, according to Fresh Plaza. Chiquita says that the move won’t decrease its U.S. tax liability, but it will keep Fyffes from being considered by the IRS.
The acquisition is being conducted via a Dublin-based holding company, known currently as Twombly One Ltd., which will buy out the shareholders of both companies, according to the news source. Once Twombly One owns both Chiquita and Fyffes, it is expected to change its name to ChiquitaFyffes PLC.
While Chiquita stressed that the move was not intended as a bid to avoid U.S. taxes, the corporate tax rate in Ireland – 12.5 percent – is significantly lower than the U.S. corporate tax rate of 35 percent, according to Fresh Plaza. While the move may not change Chiquita’s 2014 tax liability, it may allow the new company with its tax planning in years to come.
“It is greatly improbable that they have chosen Ireland as its domicile because of its superior banana-growing climate,” Edward Kleinbard, a University of Southern California law professor and a former chief of staff for Congress’s Joint Committee on Taxation told the news source. “There may not be any immediate U.S. tax consequences, that is true, but it positions the combined company to shift future income growth outside the U.S. tax net.”
- Practices: Corporate Tax Planning, Tax and Trusts & Estates, Corporate Transactions & Business
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Crypto Securities Law: When Tokens Become Investment Contracts
The application of traditional federal securities laws to crypto assets continues to evolve. In some cases, the Securities and Exchange Commission (SEC) considers tokens and other digital assets to be securities. This makes them subject to federal securities law, including the Securities Act of 1933 and the Securities Exchange Act of 1934. This classification has […]
Author: Bryce S. Robins
The Due Diligence Process for NY Condominiums and Cooperatives
While the New York City real estate market can be extremely competitive, moving too quickly often backfires. Before purchasing a condominium or cooperative in New York City, it is important to do you homework. Purchasing property in NYC can involve a dizzying number of legal issues. These include condo and co-op rules, rent restrictions, and […]
Author: Jesse M. Dimitro
Smart Contract Legal Issues: Drafting Agreements for Blockchain
Smart contracts feature a unique blend of legal agreement and technical code. This innovation has the potential to reshape how business is conducted. At the same time, smart contract legal issues around enforceability, jurisdiction, identity, and compliance are common. The legal framework for these self-executing agreements is still evolving. What Are Smart Contracts? Smart contracts, […]
Author: Bryce S. Robins
Are Stay Interviews the Key to Retaining Top Talent?
Retaining top talent continues to be one of the greatest challenges facing employers today. Even in an employer’s market, the loss of a key employee can disrupt operations and result in significant costs. While compensation plays a role, long-term retention often depends on workplace culture, communication, and employee engagement. One increasingly popular strategy for improving […]
Author: Angela A. Turiano
Why Secured Transactions Are Important
Secured transactions form the backbone of a wide range of business dealings, including business loans, mortgages, and inventory financing. Because the stakes are often high and relatively minor oversights can have drastic consequences, lenders and borrowers should thoroughly understand how to form an enforceable security agreement that protects their legal rights. What Is a Secured […]
Author: Dan Brecher
Don’t Cash a “Paid in Full” Check Without Understanding the Legal Implications
Cashing a check marked “paid in full” can be a risky endeavor, particularly if you don’t fully understanding the legal implications. If you are owed more than the amount of the check you accept and deposit, you may waive your right to collect the full disputed amount. That is why you should consider either rejecting […]
Author: Dan Brecher
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.