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Raw O-Zone Land • Expat Investment Barriers • FDII Opportunities

Nov. 9, 2019, 3:01 PM

This is a weekend roundup of Bloomberg Tax Insights, which are written by practitioners featuring expert analysis on current issues in tax practice and policy. The articles featured here represent just a handful of the many Insights published each week. For a full archive of articles, browse by jurisdiction at Daily Tax Report, Daily Tax Report: State, and Daily Tax Report: International.

We look at raw land in an opportunity zone; FDII for foreign-owned U.S. companies; new challenges for U.S. expats; how Pillar One isn’t BEPS 2; evolution from BEPS to BEPS 2; and Belgian rules on capital reduction. We’ll hear from:

  • Anna Baker of Sensiba San Filippo on using raw or agricultural land in an opportunity zone
  • Bryan Kelly and William K. Norman on the FDII deduction for foreign-owned U.S. companies
  • Jonathan Lachowitz of White Lighthouse Investment Management on the EU’s Markets in Financial Instruments Directive (MiFID II)
  • Lorraine Eden and Oliver Treidler on the OECD’s Pillar One apparent abandonment of the arm’s-length principle
  • Barry Freeman and John Lamszus of Crowe LLP on the complications that remain two years after BEPS
  • Pascal Faes of Antaxius on the modified Belgian rules on capital reductions
Horses in a pasture in Prince William County, Va. Raw land in an opportunity zone could be developed as an equestrian facility.
Photographer: Karen Bleier/AFP/GettyImages

Most opportunity zone discussion has been focused on previously developed urban property. Anna Baker of Sensiba San Filippo shows how the program can also be used for investment in raw or agricultural land. Read: Opportunity Zones—Reaping the Rewards of Raw Land Investments

Bryan Kelly and William K. Norman look at the current status of the Foreign-Derived Intangible Income (FDII) rules and discuss the availability of the FDII deduction with respect to income realized by foreign-owned U.S. companies from sale of goods or rendering of services to foreign affiliates. Read: FDII Deduction for Foreign-Owned U.S. Companies—an Overlooked Opportunity?

First, U.S. investors living in Europe had to face FATCA. Now it’s the EU’s Markets in Financial Instruments Directive (MiFID II). Jonathan Lachowitz of White Lighthouse Investment Management outlines the difficult position in which the legislation puts middle-class, overseas Americans when trying to buy simple ETFs. First It Was FATCA, Now MiFID II Has U.S. Investors in Europe Facing Nightmares

Lorraine Eden of Texas A&M and Oliver Treidler of TP&C offer six policy recommendations designed to move the global economy onto the BEPS 2 path, a path appropriate for 21st century digital multinationals that will benefit both developed and developing countries. In Part I of a two-part analysis of the Pillar One proposals, the authors provide a summary and analysis of the proposals. Read: Taxing the Digital Economy—Pillar One Is Not BEPS 2

It has been more than two years since the Organization for Economic Cooperation and Development last updated its Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations to reflect the final recommendations from the OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan, but multinational enterprises and government tax administrations alike are still grappling with many of the changes. Barry Freeman and John Lamszus of Crowe LLP highlight the complications that remain. Read: OECD Transfer Pricing Guidelines—Complexities and Inconsistencies Remain

Pascal Faes of Antaxius considers the modified Belgian rules on capital reductions by way of repayment of capital to shareholders, and related potential tax implications for the repaying company and its shareholders. Read: Belgium: Capital Reductions—Nouveau Régime

From the Archive

Bloomberg Tax contributors have been keeping up with the developments in the opportunity zone program and spotting both the potential difficulties and the not so obvious opportunities.

The opportunity zone program continues to generate both excitement and consternation for investors and their advisers. Lisa Zarlenga and John Cobb of Steptoe & Johnson LLP provided an overview of the requirements under the program rules and look at some of the solutions to work within the requirements of the statute and proposed regulations.

With the end of 2019 in sight, it is becoming important for participants in the opportunity zone marketplace—investors, project sponsors, and their advisers—to understand the relevant timetables so as to maximize the value of the incentive. While some deadlines are arriving in the very near future, others are structured to buy a little time before investments in actual projects or businesses have to be made. Forrest Milder of Nixon Peabody discussed the timing requirements and exceptions that you should know.

Beyond Tax

What’s happening outside the world of tax?

Major, Lindsey & Africa’s Mark Yacano looks at how technology can help attorneys, especially associates, find mental well-being and boost their careers by freeing their time to do more challenging legal work. Technology can be overwhelming, he says, but used correctly, it can enhance an attorney’s life. Read: Technology Can Help Attorneys Find Meaning, Elevate Lives, Enhance Careers

In the first of two open letters to corporate legal departments, Dr. Silvia Hodges Silverstein, executive director of Buying Legal Council, and Dr. Evelyn Paetsch, with Deutsch Bahn AG, debunk common prejudices and beliefs about the need to collaborate with colleagues in procurement to buy legal services. Doing so will save money and allow attorneys to do what they do best—legal work. Read: An Open Letter to In-House Counsel and Legal Ops Managers—Work With Procurement

Organization and ownership are the two keys to success cited often by Alabama football coach Nick Saban. Beau Sylvester took those lessons from a meeting with Saban and applied them to his work structuring legal compliance and operations first at Walmart and now at Asurion. Read: What Nick Saban Taught Me in My Legal Ops Journey From Walmart to Asurion

A program to reform the U.K. justice system is underway, but concerns over costs and accessibility have arisen. Ilana Baines, an attorney with Byrne and Partners LLP in London, examines some of the more controversial reforms such as online pleas. Read: U.K. Justice System Reform—Online Pleas and a Common Platform

Exclusive Content for Bloomberg Tax Subscribers

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Many issues litigated under the Employee Retirement Income Security Act of 1974, as amended (ERISA) are determinative on the jurisdiction in which the claim is brought. These issues of late have caught the attention of the Supreme Court. José Jara and Anthony Fassano of Archer & Greiner P.C. analyze Intel Corp. Inv. Policy Committee v. Sulyma, a case in which the court will rule on what is actual knowledge under ERISA’s statute of limitations. Is it actual knowledge of the underlying facts supporting a claim? Or is it not only the knowledge of these underlying facts, but in addition the understanding that there is a legally viable claim? Furthermore, the court may rule on what responsibilities a plan participant has in terms of reading and understanding mandated disclosures.

Bloomberg Tax Insights articles are written by experienced practitioners, academics, and policy experts discussing developments and current issues in taxation. To contribute please contact Erin McManus at emcmanus@bloombergtax.com.

To contact the reporter on this story: Erin McManus in Washington at emcmanus@bloombergtax.com