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US Treasury hint at retaliatory action over EU bias against US corporations

Date: 22 Sep 2016

Citywealth

Ivan Sacks (pictured), Nancy Yamaguchi, Diana Wierbicki, and M. Ridgway Barker at Withers Worldwide, USA say tech or software as a service is fuelling incredible wealth in the US.

Following the EU judgment in the Apple vs. Ireland case, are US corporates worried?

M. Ridgway Barker, ‘Ridge’

The US Treasury issued a White Paper criticising the Commission for its approach and hinting at the possibility of retaliatory action against EU-based corporations because there is a perceived bias by the EU Commission against US corporations. As a result, yes corporations have begun to take a closer look at tax agreements that they have implemented in the past with EU member states and are developing responsive tax planning, and ultimately their operational strategies. The concern for US corporations is that the EU Commission will have the right to scrutinize the application of all national tax rules to multinational companies.

Do you still see clients from Latin America?

IvanSacks

We continue to see a lot of movement from Latin America to the US. Some of it is for the usual reasons like education for children, professional, executive and investment opportunities, and relative personal safety and political stability. However, negative political and economic developments in a few countries have brought new reasons including concern about the loss of privacy linked to Common Reporting Standard requirements. Our work is around pre-immigration planning to the US for clients personally, or changes in the reporting and compliance of their investment or trust structures which will have US or multi country reporting requirements.

Is the tech sector continuing to boom?

Nancy Yamaguchi

Yes, it continues to experience exponential growth, especially software as a service (SaaS), FinTech and artificial intelligence (AI). Just this year the SaaS market is estimated to be worth approximately $92.75 billion worldwide with Salesforce.com, headquartered in San Francisco, occupying the largest share of the consumer market. FinTech is also on the rise: in 2015, FinTech startups raised $7.6 billion in investment, compared to $4.7 billion in 2014 and $1.5 billion in 2013. AI is everywhere these days, from self-driving cars to factory automation and retail. Bank of America/Merrill estimates that AI will grow to a $153 billion market over the next five years, of which $83 billion accounts for robotics and $70 billion in AI systems.

And art?

Diana Wierbicki

In the US, art is subject to a higher long-term capital gains tax than other investment assets so with art prices rising, art owners want to find ways to hold art without incurring large tax bills. One way is to use an irrevocable trust to remove art from an estate and to separate the appreciation on the art and, in some cases, rent the art back to the grantor. For the charitable, transferring valuable art into a charitable remainder trust can create a stream of income from the sale of art, spread out the tax burden over a number of years, satisfy charitable giving objectives and help with tax deductions. Art is receiving increasing scrutiny from the New York State tax authorities which is home to the largest art market in the US, if not the world. In this year to date, there have been a number of high profile, public settlements with art collectors and galleries for alleged violations of the sales and tax laws. Tax laws applied to art is a developing area and one that should be reviewed regularly by all collectors who buy, sell and keep art in New York.

This article was published in Citywealth Weekly, our mid-week roundup of topical news and exclusive expert comments.Sign up here to start receiving the Weekly in your inbox.

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