---
title: Corporate Inversions
date: 2017-07-18T00:00:00-04:00
author: Import Bot
canonical_url: "https://www.kelleydrye.com/viewpoints/client-advisories/corporate-inversions"
section: Client Advisories
---
# Corporate Inversions

  July 18, 2017

Kelley Drye Client Advisory

 

 

 

 

 

 

A multinational corporate group headed by a U.S. parent corporation is often at a competitive disadvantage compared to a multinational corporate group headed by a foreign corporation. While a multinational corporate group headed by a U.S. corporation is generally subject to U.S. taxation on its worldwide income, subject to the potential availability of the foreign tax credit and U.S. tax deferral, a multinational corporate group headed by a foreign corporation is generally subject to U.S. taxation only with respect to (i) taxable income derived by U.S. affiliates, (ii) U.S. ​“effectively connected income” of foreign affiliates, and (iii) U.S.-source FDAP (“fixed and determinable, annual or periodical”) income of foreign affiliates.

To maximize its after-tax net economic return, many U.S. multinationals have engaged in so-called ​“corporate inversion” transactions. In a typical inversion, a U.S. multinational combines with a foreign corporation and the ultimate parent of the surviving entity is a foreign corporation.

The objectives of a U.S. corporation that engages in an inversion typically include:

- 
- Accessing trapped cash;
- Leveraging U.S. affiliates to increase U.S. interest tax deductions;
- Transferring assets and activities outside the U.S.;
- Adopting a tax-efficient transfer pricing methodology;
- Structuring future acquisitions outside the U.S. ownership chain; and
- Decontrolling ​“controlled foreign corporations.”

  
The attached [Corporate Inversion Presentation ](https://s3.us-east-1.amazonaws.com/cdn.kelleydrye.com/content/uploads/viewpoints/Tax_Corporate-Inversions_TTN-Conference_Miles_June_2017-4811-4289-5691-v-1-(1).pdf)describes applicable rules that limit or eliminate tax benefits arising in connection with a corporate inversion. The presentation also identifies issues that should be considered following a corporate inversion.If you have any questions, please feel free to contact [Jack Miles](/Our-People/Jack-J-Miles) at [jmiles@​kelleydrye.​com](mailto:jmiles@kelleydrye.com) or (212) 808-7574.

 

 

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### Attachments

- [Tax Corporate Inversions TTN Conference Miles June 2017 4811 4289 5691 v 1](https://s3.amazonaws.com/cdn.kelleydrye.com/content/uploads/attachments/Tax_Corporate-Inversions_TTN-Conference_Miles_June_2017-4811-4289-5691-v-1.pdf)
 
 

### Related Services

- [Corporate and Tax](https://www.kelleydrye.com/practices/corporate-and-tax)
- [Tax](https://www.kelleydrye.com/practices/tax)
 
 

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