International Taxation
Sonnenschein’s tax lawyers have many years of experience advising clients on a variety of transactional matters, including the acquisition and disposition of foreign entities, joint ventures with foreign partners, project financings, privatizations, various restructurings of foreign operations of U.S. multinationals, cross-border finance strategies, inbound investments and treaty interpretation.
Our tax lawyers regularly provide advice on the tax aspects for U.S. investors of debt and equity offerings by foreign issuers and the tax aspects for non-U.S. investors of debt and equity offerings by U.S. issuers. In addition, Sonnenschein tax lawyers have extensive experience advising U.S. multinational clients on an ongoing basis concerning a variety of operational matters involving their foreign activities, including transfer pricing. As part of its international tax practice, our tax lawyers also are adept at developing deferral strategies for outbound U.S. tax planning using offshore entities and other entities formed in jurisdictions, such as disregarded entities, and have substantial experience in reorganizing the foreign operations of U.S. multinationals to achieve a lower global effective tax rate.
The reputation of Sonnenschein’s tax practice is enhanced by the leadership positions our partners have held in a variety of professional associations including the Tax Section of the American Bar Association, the Practicing Law Institute, and the American College of Tax Counsel and membership in the International Fiscal Association. Our tax lawyers have written numerous articles for national publications and are frequently called upon to address a wide variety of business and professional associations, institutes and universities on various tax-related subjects.
Capabilities & Experience
International Business Operations
We have extensive experience and capabilities with respect to the U.S. income tax consequences to U.S. and non-U.S. persons in connection with their cross-border investments and operations.
Outbound Tax Planning/U.S. Multinationals
With respect to U.S. multinationals, we have served as primary tax counsel structuring their foreign operations and rendering advice on ongoing taxation issues. In particular, we regularly counsel our clients on the structuring of their foreign operations to avoid controlled foreign corporation and passive foreign investment company status; Subpart F issues; contract manufacturing; transfer pricing; issues related to various financings and credit facilities; maximum utilization of U.S. foreign tax credits; tax-efficient repatriation of offshore funds through the use of treaties and dual resident corporations; foreign acquisitions and foreign branch losses and recapture thereof.
In addition, we advise U.S. multinationals in connection with restructuring the ownership and operation of their foreign subsidiaries and branches, which often involve numerous intercompany transactions, debt push-downs for local country advantages and the use of disregarded and other flow-through entities. These restructurings typically have involved operations in Europe, Asia and Latin America.
Inbound Tax Planning/Foreign Corporations
We have also served as primary tax counsel to non-U.S. persons with respect to their investments and operations within the U.S. In that capacity, we regularly advise our clients concerning their U.S. income tax (both at the federal and state levels) exposure, minimizing the risk of being considered to be engaged in a U.S. trade or business; structuring investments in U.S. real property; branch profits tax issues; withholding tax issues; conduit financing issues, earnings stripping and tax treaty implications.
Structured Tax Advantaged Transactions
Working closely with U.S. and foreign investment banking and bank clients and other financial institutions, we structure and analyze techniques to achieve favorable U.S. and foreign tax results, including "deductible principal" and reverse “deductible principal” transactions, “double dip” financings, increased foreign tax credit utilization, deferral of taxable gains, triggering and increasing taxable losses, and the repatriation of foreign earnings with no net additional U.S. tax.
Cross-Border Acquisitions
We regularly advise U.S. multinationals on the acquisition of non-U.S. entities and on the acquisition of other U.S. multinationals with foreign operations. In that context, we take into account the financing requirements and ongoing business operations to create optimal structures for our clients.
Investment Funds
We have substantial experience in advising U.S. investment funds and private equity funds as to the optimal structure for their funds, contemplating foreign investments, and the most tax- efficient structure for particular foreign acquisitions.
Cross-Border Securities Offerings
We regularly advise clients on the U.S. federal income and withholding tax consequences of the offering of publicly-traded securities of U.S. issuers to foreign investors and the offering of securities of foreign issuers to U.S. and foreign investors.
Individuals
We regularly advise non-resident alien individuals on the U.S. tax consequences of becoming a U.S. resident and U.S. citizens on becoming a tax resident of a foreign jurisdiction, including the tax treatment of compensation earned outside of the individual’s home country. This advice is also regularly provided to U.S. multinationals in connection with determining their U.S. withholding and employment tax obligations.
Selected Transactions
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Representation of U.S. and foreign financial institutions in connection with analyzing and structuring of tax advantaged cross-border “double-dip” financings and deductible principal and interest loans, and tax advice in connection with analyzing and structuring the ‘new’ generation of cross-border “multiple-dip” financings.
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Representation of various U.S. multinationals in connection with their international restructuring, including the formation of new holding companies, and the use of disregarded entities, designed to lower its overall effective tax rate. These restructurings include operations/foreign subsidiaries in Latin America, Europe and Asia.
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Representation of a number of U.S. public companies, primarily in the retail industry, in connection with issues concerning U.S. taxation of their foreign operations, including Subpart F issues and Section 482 issues, arising out of restructuring their foreign operations, e.g., transfer of operations to lower-taxed foreign jurisdictions, closing of unprofitable foreign subsidiaries, acquisition of other foreign entities, and various foreign joint ventures.
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Representation of the majority owner, a dual resident of the U.S. and a European country, of a large multinational manufacturing and distribution business based in Europe, with extensive operations in North America, South America, and Asia as well, on a multitude of cross-border tax issues including Subpart F, use of foreign tax credits, use of the “check-the-box” rules, residency, treaty interpretation, and tax reporting.
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Representation of various non-U.S. corporations in connection with the structuring of their U.S. marketing operations, including those of a foreign garment producer, a foreign software developer, and a foreign paper manufacturer seeking to sell their products in the U.S. without being subject to U.S. tax.
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Representation of U.S. transportation company in connection with the $700 million acquisition of a Mexican transportation company.
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Representation of a foreign insurance company in connection with structuring annuity products.
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Representation of a Bermuda insurance company in connection with its private placement of stock to U.S. investors.
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Representation of a foreign trust company in connection with the new U.S. information reporting and documentation rules with respect to withholding and backup withholding taxes.
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Representation of foreign-based hedge funds in connection with various U.S. tax issues, including deferred compensation arrangements and potential restructurings of their operations.
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Representation of a U.S. technology company in connection with various joint ventures with different foreign participants for the transactions in Mexico, South Africa and Japan.
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Provision of tax advice to a U.K. telecommunications company on the providing of telecommunication services in the U.S.
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Representation of a non-U.S. telecommunications company in connection with the issuance of over $1.6 billion of securities including two registered equity offerings and three tranches aggregating $900 million in principal amount of debt issued under a Rule 144A/Regulation S medium-term note program.
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Representation of a U.S. real estate investor in connection with structuring real estate investments in Latin America.
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Representation of a U.S. industrial manufacturer in connection with structuring its joint ventures in Brazil and Mexico.
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Representation of various U.S. manufacturing corporations and U.S. corporations engaged in the licensing/franchising businesses in connection with withholding tax issues that arise in international trade.
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Representation of a U.S. public energy company in connection with a Colombian privatization of energy distribution and generation facilities.
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Representation of a foreign hedge fund in connection with the restructuring of their worldwide operations.
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Representation of a major U.S. manufacturer in connection with their Chapter 11 bankruptcy proceeding including their Canadian subsidiaries.
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Representation of a large toy manufacturer in its acquisition of a Bermuda—based toy company with subsidiaries in a number of foreign jurisdictions and the United States; the representation also involved restructuring the target corporate group to efficiently manage U.S. tax issues after the acquisition and to preserve U.S. net operating losses.
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Provision of tax advice to a U.S. real estate developer to invest in a real estate development (shopping centers) joint venture in Argentina.
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Provision of tax advice to a financial services company concerning financing transactions of real estate in Latin America.
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Provision of tax advice to a U.S. power company concerning a potential privatization bid in Colombia.
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Provision of tax advice to a public company concerning a restructuring of a Peruvian privatization after interests in a privatized entity were acquired.
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Provision of tax advice to a Canadian corporation concerning its migration to the U.S.
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Provision of tax advice to banks and institutions centered in the Middle East concerning U.S. in-bound lease financing transactions.
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Provision of tax advice to foreign banks engaged in trade or business in the U.S. and the special rules related to banks conducting business within the U.S.
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Provision of tax advice to various foreign corporations involved in the software, garment and paper manufacturing industries concerning selling products in the U.S. without being subject to U.S. tax.
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Provision of tax advice to various foreign funds concerning their trading activities and their exposure to U.S. tax, including the consequences to their U.S. shareholders, which has included the liquidation of a foreign fund in a manner so as to avoid the passive foreign investment company rules.
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Representation of large multinationals before IRS Appeals, U.S. Tax Court and U.S. and foreign competent authority in multi-million dollar transfer pricing matters.
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Representation of a multinational manufacturer in a tax case involving the interpretation of the U.S.-Canada tax treaty.
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Provision of tax advice to a U.S. service corporation on restructuring its European operations and positioning the U.S. parent to claim bad debt and worthless stock losses for German operations.
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Provision of tax advice to large multinationals regarding compliance with the transfer pricing documentation requirements and the production of foreign-based documents.
