OUR THOUGHTS ON:

Corporate Inversions - Are We There Yet?

Tax

By Mary Richter

The ball is rolling downhill and picking up speed.  That’s what it has seemed like during the past six months regarding corporate inversions.  From traditional financial services and big pharma, the pace of inversion transactions has definitely increased and is now including medical equipment makers and real estate companies.   Apparently, companies think that it’s time to get structures in place before the laws change - something that is widely anticipated after the fall elections. 

Earlier this week, Ohio-based Steris Corporation indicated that it will invert as a part of its acquisition of UK-based Synergy Health.  Of course, there are other big name inversions in the news - some previously announced plans have been put on hold, some cancelled, but others continue to move forward.  And some transactions (Walgreen’s) have been stopped.

The Treasury has indicated that it will use its powers to interpret and apply existing rules to curb inversions, where possible, primarily by shutting down the use of certain debt structures.  Several lawmakers have introduced legislation to further curtail the ability to invert without changing the management or operations.  Stay tuned for updates, after the November election.

As a footnote, while the concept seems distasteful to many folks, let’s keep it in perspective.  Since 1982, there have been about 50 reported inversion transactions.  Perhaps we can encourage our legislators to look at the bigger tax picture and not only focus on this one area.  Surely, there are other areas of the tax code that can use some revision.

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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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