Report on a session from the 25th Annual US and Europe Tax Practice Trends Conference held in Amsterdam on 10 April 2025

Session Co-chairs

Susanne Schreiber, Bär & Karrer AG, Zürich
J Brian Davis, BakerHostetler, Washington, DC

Panellists

Amelia O’Beirne, A&L Goodbody, Dublin
J Leonard Teti II, Cravath, Swaine & Moore, New York
Gunther Wagner, Hengeler Mueller, Munich
Reinout de Boer, Stibbe, Amsterdam
Jessica Kemp, White & Case, London

Reporter

James Quirke, McCann Fitzgerald, Dublin

Introduction

The panel discussed various topics around multinational companies relocating back to the United States and the push and pull factors involved. The speakers spoke of how, in many respects, this represents a mirror image of the inversion paradigm prevalent more than a decade ago. The speakers elaborated on the considerations relevant to non-US multinational enterprises that are seeking to more closely align their business operations with the US in response to economic and geopolitical measures.

Panel discussion

The co-chairs of the panel, J Brian Davis and Susanne Schreiber, opened the session by setting the scene in terms of the ‘switch’ from, in the past, US companies aligning with the European Union, to now, EU companies aligning with the US.

Davis also outlined some of the reasons for this trend, which include access to capital, management preferences and regulatory reasons. Davis posed the question as to whether tariffs could also impact on the decision to relocate back to the US, but noted that company operating model re-alignments may be a less intrusive trade response.

J Leonard Teti II revisited some of the tax issues that impact the decision as to whether to ‘stick’ where a company had inverted out of the US or whether it should ‘flip’ and revert back to the US. Teti pointed out that pre-2017 it was almost always ‘better’ to put a non-US parent on top, but, since 2018, it is a much closer call due to the implementation of the Tax Cuts and Jobs Act (TCJA). Teti said that if companies are making the decision to return to the US, it should be a permanent decision.

Schreiber provided an overview of the main tax-related aspects in the case of a UK, Irish, Dutch or US top holding company in terms of the receipt of (tax free) dividends, general corporate income tax rates and withholding taxes on distributions to its shareholders as criteria for making decisions on the location of the top holding company.

Reinout de Boer spoke of the steps involved in the Netherlands in terms of reverting back to the US and set out the Dutch tax considerations. De Boer pointed out ‘things to watch out for’, in particular, that the withholding tax position on payments from the Netherlands to the US needs to be carefully considered. De Boer also mentioned the new rules implemented in the Netherlands with effect from 1 January 2025 in relation to the tax treatment of non-Dutch limited partnerships.

Jessica Kemp spoke of the steps involved in the UK in terms of a company reverting back to the US and set out the UK tax considerations. Kemp said that it should be possible to put in place a US top company in a tax neutral manner. She also said that tax used to be one of the biggest drivers in terms of the decision as to where to locate a company; however, nowadays, in addition to tax, corporate, regulatory and commercial drivers are increasingly coming into play. Kemp flagged the difficulties associated with UK shareholders rolling into US limited liability companies (LLCs).

Gunther Wagner spoke of the steps involved in Germany in terms of a company reverting back to the US and set out the German tax considerations. Wagner set out the tax implications of a share-for-share transfer and a spin-off, and discussed the German tax implications for individuals and corporations.

Amelia O’Beirne spoke of the steps involved in Ireland in terms of a company reverting back to the US and set out the Irish tax considerations. O’Beirne noted that Ireland had been a beneficiary in terms of the ‘wave’ of inversions that took place ten plus years ago. O’Beirne pointed out that there have been no examples of public company reversions back to the US in the Irish market to date. O’Beirne added that the redomiciliation of an Irish public company could be achieved by way of a court-sanctioned scheme of arrangement; however, she flagged that the stamp duty position in this regard requires detailed consideration.

Next, the speakers looked at various specific scenarios in more detail.

Teti discussed the US tax implications of a US spin-off and a reverse Morris trust (RMT). He also elaborated on the US tax implications of a merger between a US company and a non-US counterparty. Teti referred to the Pfizer/Mylan (a 2020 transaction involving a US spin-off company on top) and the HP/Micro Focus (a 2016 transaction involving a non-US counterparty on top) as examples of such transactions.

O’Beirne discussed the Irish tax implications of an Irish spin-off and an Irish spin-out of a US spin-off company. She pointed out the Irish dividend withholding tax is a key consideration for shareholders of the Irish company, whereas Irish capital gains tax is often less relevant, since the number of Irish shareholders is typically small.

Kemp and De Boer discussed the tax implications of spin-outs of US companies in their respective jurisdictions, being the UK and the Netherlands, respectively.

The next topic looked at in detail was the tax implications of the move of management to the US.

De Boer set out the Dutch tax considerations of a move of management from the Netherlands to the US.

Wagner set out the German tax considerations of a move of management from Germany to another jurisdiction. He pointed out that the potential tax consequences of such a relocation concern a dual resident entity and German exit taxation.

Schreiber set out the Swiss tax considerations of a move of management from Switzerland to the US. She pointed out that because of the different tests for residence and permanent establishments in different jurisdictions, the rules can become complicated in terms of what foreign companies can do in the US.

Kemp set out the UK tax considerations of a move of management from the UK to the US. She pointed out that currently there is no way to redomicile a company into or out of the UK. Kemp also highlighted a number of practical points to consider in terms of any such relocation of management, in particular, in relation to exit charges, the Organisation for Economic Co-operation and Development’s Pillar Two framework and the continued availability of losses.

Conclusion

Davis said that the decision to relocate a company back to the US requires a lot of consideration and will be driven by many factors.

The speakers all agreed that in terms of a determining factor, tax is less ‘in the driving seat’ and that many other factors, which were discussed during the course of the session, come into play.