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TAXATION IN A GLOBAL ECONOMY

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International taxation is a system of global tax rules that apply to transactions between
two or more countries. While tax planning for purely domestic transactions is subject to a unified
country tax code enforced by a single governing body, tax planning for cross-border transactions
depends on the interaction of tax laws and enforcement agencies in multiple countries.1 This
interaction can lead to excessive taxation or minimal taxation on cross-border transactions.

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Given differing tax consequences across countries, taxpayers must incorporate tax planning into
their strategic decisions. Taxpayers, fearful of excessive taxation, can simply structure
transactions to limit their additional global tax exposure while taxpayers, seeking to maximize
after-tax returns, can structure transactions to chase the lowest tax consequences.

The Importance of Understanding the Taxation on Foreign Investment and Services

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During 2010, the United States imported approximately $2.34 trillion and exported
approximately $1.84 trillion of goods and services, both 90% increases since 1999. Today’s
global marketplace demands that participants have a thorough understanding of the cultural,
legal, and financial impacts of cross-border transactions. As businesses pursue cross-border
transactions, they will benefit from a general understanding of international taxation, and the
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benefit will only increase as more transactions span multiple borders in the future.

Tax Systems

Tax systems determine when, where, what and whose income is subject to taxation. In
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the international arena, tax systems are classified into two categories with most countries’
systems comprising a hybrid:

1
Multijurisdictional taxation is a more general term that refers to taxation across multiple jurisdictions
including countries, states, and localities. This note focuses on the international aspects of multijurisdictional
taxation. This note also focuses on the cross-border transactions of U.S. entities.
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This technical note was prepared by George Mattingly (MBA ’03) and Associate Professor Mary Margaret Frank.
Copyright  2011 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved.
To order copies, send an e-mail to [email protected].. No part of this publication may be
reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—
electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School
Foundation.

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1. A territorial tax system taxes residents on income earned within its jurisdiction.
2. A worldwide tax system taxes residents on income earned regardless of the jurisdiction.

The global debate on the optimality of the these two tax systems focuses on the costs and
benefits to multinationals (i.e., corporate residents) because countries that have territorial tax

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systems (e.g., France) generally apply it to only active business income and not to compensation
or income from portfolio investments. Almost all countries apply a worldwide tax system to their
individual residents on their compensation and portfolio income and tax all nonresidents on only
domestic-sourced income (income earned within the respective country’s jurisdiction).

For example, a U.S. multinational corporation with income generated from operations in

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France pays taxes to the United States under its worldwide tax system on income earned in
France and to France under its territorial tax system on the same earnings. A French
multinational corporation with income from operations in the United States would only pay taxes
to the United States under France’s territorial tax system. This differential creates a competitive
disadvantage for multinational businesses incorporated in countries with worldwide tax systems.
Therefore, countries with worldwide tax systems must offer some form of tax relief to their
residents. First, most countries with worldwide tax systems provide their multinational
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companies with the benefit of deferral. That is, the multinational does not recognize the foreign
income, which is earned by its foreign subsidiaries, in its home country, until the cash is
distributed to the U.S. parent. In addition, worldwide tax systems also allow their corporate and
individual residents to receive tax credits for foreign taxes paid on their foreign income, often
referred to as a foreign tax credit (FTC).2
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Resident and Nonresident

Every country defines its residents differently. The United States defines its residents as
follows:
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1. U.S. citizens
2. Resident aliens
a. Permanent residents (i.e., green cards)
b. Not U.S. citizens but have a substantial presence in the United States3
3. Corporations incorporated under the laws of the United States
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2
The relief of double taxation from foreign tax credits also leads some texts to refer to worldwide tax systems
as credit systems.
3
For a non-U.S. citizen to have substantial presence, the person must literally count her days in the United
States. If the person spends 31 days in the current year, and the weighted average of her time spend in the United
States over the last three years is 183 days, then the person has substantial presence.

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A popular misconception is that a U.S. citizen can move to a tax haven to escape the U.S. tax,
but the United States taxes its citizens on their worldwide income no matter where they live. The
only way to avoid paying U.S. taxes is for a U.S citizen to renounce her citizenship or a U.S.
corporation to incorporate in another country. Examples of other countries’ definitions of
resident can be found in Appendix A. Nonresidents are by default everyone else. Generally, they

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are taxed on income that is earned within the country.

Foreign Tax Credits

Residents of worldwide tax systems pay tax twice on the same income if their home
country’s worldwide tax system offers no relief. Most worldwide tax systems, however, offer

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some form of foreign tax credits (FTCs) to their corporate and/or individual residents as relief
from double taxation. In the United States, the FTC is only available for foreign income taxes or
withholding taxes and reduces a resident’s income tax liability owed to her home country (i.e.,
United States). In the United States, the FTC also has a limit in a given year. The FTC is the
lesser of the foreign taxes paid and the FTC limit and cannot be negative.
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FTC = Minimum (foreign taxes paid, FTC limit)

The foreign taxes paid are a function of the foreign country’s tax laws that define taxable income
and its tax rate. The FTC limit is a function of U.S. tax laws that define foreign-sourced income
(income earned outside of the respective country’s jurisdiction) and the U.S. tax rate. Foreign
taxable income does not have to equal foreign-sourced income; therefore, the FTC is a function
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of the varying taxable base (foreign taxable income versus foreign-sourced income) and tax rates
(tUS and tFOREIGN).

FTC = Minimum (foreign taxable income * tFOREIGN, foreign-sourced income*tUS).

If the FTC limit exceeds the foreign taxes paid, then the company has an excess limitation
position.
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Excess limitation = (foreign taxable income * tFOREIGN < foreign-sourced income*tUS).

If the foreign taxes paid exceed the FTC limit then the company has an excess FTC position,
which it can carry back two years to years with excess limitation positions and claim a refund of
prior U.S. taxes paid or carry it forward five years to years with excess limitation and increase
the foreign tax credit available to offset U.S. taxes in that year.
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Excess FTC = (foreign taxable income * tFOREIGN > foreign-sourced income*tUS).

Appendix B provides examples of four FTC calculations. Once a company with an

excess FTC position exhausts the benefit of carrying back the FTCs for a refund, there are other

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ways the company can maximize its FTCs besides waiting to carry the FTCs forward over the
next five years.

Cross-crediting

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Cross-crediting is a process whereby companies attempt to lower their excess FTCs by
blending foreign-sourced income from low (excess limitation) and high (excess FTC) tax
regimes.

Shifting income and deductions

Using foreign tax law to shift more deductions (less income) to lower foreign taxable

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income only, the taxpayer can reduce its excess FTC position by reducing foreign taxes paid.
Using foreign sourcing rules under U.S. tax law to shift more income (fewer deductions) to
increase foreign sourced income only, the taxpayer can reduce its excess FTC position by
increasing the FTC limit.
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Tax Treaties

The traditional objectives of U.S. tax treaties have been the avoidance of international
double taxation and the prevention of tax evasion. Notwithstanding the relief measures
incorporated in U.S. tax law, such as FTCs, double taxation might still arise because of
differences in how the countries allocate income and deductions. For example, foreign tax law
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allocates income to the foreign country, and the U.S.’s foreign sourcing rules allocate the same
income as U.S.-sourced income instead of foreign-sourced income. Problems can also arise when
the foreign tax paid does not qualify for the U.S. foreign tax credit. Finally, double taxation may
also arise in situations where a corporation or individual is treated as a resident of two countries,
which have worldwide tax systems. Given the diversity of the global tax systems, it would be
very difficult to develop rules that unilaterally alleviate double taxation without tax treaties.
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Another related objective of U.S. tax treaties is the removal of barriers to trade, capital
flows, and commercial travel caused by overlapping tax jurisdictions. For example, tax treaties
often provide for incentives for foreign investment through the reduction or elimination of
withholding rates on dividends and interest.

Treaties seek to eliminate double taxation by defining the term “resident,” so an

individual or corporation generally will not be subject to taxation as a resident of two countries.
Treaties also provide that neither country will tax business income derived by residents of the
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other country unless the business activities in the taxing jurisdiction are substantial enough to
constitute a permanent establishment in that jurisdiction.

What constitutes a permanent establishment will depend on the precise terms of the
relevant treaty, but two popular variations of permanent establishment include:

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1. A fixed place of business through which the business of an enterprise is wholly or partly
carried on. To qualify for this rule, a firm must occupy or have the right to use real estate
for a considerable period of time and conduct activities core to the activities of the
enterprise from this place of business.
2. An agent has the authority to conclude contracts on behalf of the enterprise and performs

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these activities on a habitual or ongoing basis.

It is important to recognize that only activities that are core and substantial to the business result
in a permanent establishment. For example, if a U.S. company owned a place for storage or
displayed its available services in France, it would not create a permanent establishment.
Additionally, services such as advertising, information gathering, and scientific research are

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generally exempt from creating a permanent establishment.

Under the terms of most tax treaties, a country may only exercise its right to tax active
income earned by nonresidents if the income arises from a permanent establishment in the
country. Active income in the United States is income connected with a U.S. trade or business
and is subject to U.S. graduated tax rates similar to income earned within the United States. For
example, a foreign company consults in the United States. Tax treaties provide tax relief from
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U.S. taxation if the company does not have a permanent establishment in the United States.
United States residents receive similar tax relief if they earn income and do not have permanent
establishments in countries that have treaties with the United States.

In contrast, passive income is dividends, capital gains, interest, and royalties. Passive
income earned from U.S. sources by nonresidents is subject to U.S. withholding taxes. The
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United States has standard withholding tax rates, but tax treaties may reduce them.4 U.S.
residents receive similar tax relief on passive income earned from other treaty countries.

Tax treaties also seek to prevent tax avoidance and evasion by the agreement of each
country to exchange tax-related information. The treaties generally provide for the exchange of
information between the tax authorities of the two countries when such information is necessary
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for carrying out the provisions of the treaties or their domestic tax laws. The provisions generally
result in an exchange of routine information, such as the names of residents receiving investment
income. The tax authorities can also request specific tax information from a treaty partner,
including information related to criminal investigations or prosecutions.

The Organization for Economic Cooperation and Development and the United Nations
established similar model tax treaties that serve as the basis for nearly every tax treaty. These
model tax treaties contain standard articles with commentaries to assist countries during the
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negotiation and interpretation of tax treaties.

The vast majority of tax treaties are bilateral, but efforts exist to create multilateral tax
treaties. Examples of successfully completed multilateral treaties include the EU Parent-

4
In the United States, the standard withholding rate is usually 30%.

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Subsidiary Dividends Directive, which avoids the double tax on dividends paid by a subsidiary
to its parent across member states and the EU Merger Directive, which allows for the tax-free
transfer of assets across member states.

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Withholding Tax Rates

Generally, countries will not impose income tax on passive income such as dividends,
interest, and royalties earned by nonresidents. Instead, the country will require the resident entity
making the payment to withhold taxes due on the payment to the nonresident and pay the taxes
directly to the government. For example in the United States, foreign taxpayers are taxed at a flat
30% withholding rate on U.S.-sourced interest, dividends, rents, royalties, and personal services.

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Other examples include, France’s required 25% withholding tax on dividends paid by resident
corporations to non-French beneficiaries and China’s imposed 10% withholding rate on dividend
payments to non-Chinese taxpayers. Yet tax treaties often reduce or eliminate these withholding
tax rates. For example, the EU Parent-Subsidiary Directive, a multilateral tax treaty among EU
nations, eliminated withholding taxes on dividends between a parent and its subsidiary
companies so long as both entities were located in EU member states. Additionally, many tax
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havens provide for 0% withholding to attract foreign capital. The process of routing capital
though countries, which have favorable withholding rates, is known as treaty shopping.

Treaty Shopping
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Suppose a U.S. company wanted to invest in country A, but it was concerned that a tax
treaty did not exist between the United States and country A. As a result, future distributions
from Country A would be subject to its 30% withholding tax rate. Country B, a well-known tax
haven, has an excellent treaty relationship with country A, and distributions from country A to
country B are free from withholding taxes. Additionally, country B does not impose any
withholding taxes on distributions from within its borders. Therefore, the United States
consulting firm incorporates an intermediary entity in country B, so it can benefit from the
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favorable treaty between country A and country B. The operations in country A route
distributions to the entity in country B and then route the distribution to the parent company in
the United States. Although this strategy is lawful, most countries regard such activities as
unacceptable and have enacted antitreaty shopping provisions. Most antitreaty shopping
provisions either disallow certain types of entities incorporated in tax havens from treaty
benefits, and/or require such entities to demonstrate that they have a legitimate business purpose.

The U.S. tax authorities believe that only “legitimate” residents should benefit from its
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tax treaties. It has specific regulations that require intermediary entities to have sufficient
business purposes before receiving the benefits of U.S. tax treaties. Sufficient business purposes
are normally defined as having a place of business in the intermediary country and conducting a
trade or business within that country. Conversely, other countries, such as Japan and the

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Netherlands, do not favor antitreaty shopping provisions because it restricts the free flow of
international capital.

Tax Haven

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A tax haven is not a tax shelter. A tax shelter is a tax avoidance plan. A tax haven is a
foreign country with corporate and tax legislation designed to attract the formation of entities by
parent companies based in heavily taxed industrialized nations.

Residing in a tax haven does not provide a benefit for individual taxpayers from the
United States because the U.S. tax system taxes the worldwide income of its citizens.

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Corporations are considered separate and legal persons; therefore, the most common method of
establishing foreign citizenship is to incorporate in a tax haven. Authorities in tax havens
purposefully make incorporating easy and limit the requirements that must be met. Generally,
companies must simply maintain a local registered office; keep a registrar of shareholders,
officers, and directors; hold an annual meeting of shareholders (though this does not always have
to occur within the jurisdiction of the tax haven); and file an annual return to incorporate in a tax
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haven.

But not all tax havens are alike. Companies choose to incorporate in a tax haven based
not only on the specific tax advantages offered but also on the cultural, geographic, and legal
ramifications involved. Generally, tax havens are classified into three categories:
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1. Base havens: Bermuda, the Cayman Islands, and the Bahamas have no form of income
tax and provide for strict nondisclosure. Base havens generally do not have tax treaties
with other countries due to the pressure tax treaties create to share information.
2. Intermediary havens: These havens wish to attract companies merely looking to establish
intermediary holding companies and do not provide for favorable taxes on commercial
activities conducted within their respective borders. There are normally no withholding
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taxes on dividends or interest received or paid. Luxembourg, the Netherlands, and

Switzerland allow companies that conduct no actual business “in-country” to pay only
registration fees, initial capital taxes, and a small annual fee.
3. Industry havens: Certain countries provide special legislation that favors a specific
industry or activity but do not provide uniform tax benefits.

Branch/Subsidiary
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While U.S. businesses are subject to worldwide taxation, the income earned by their
foreign subsidiaries reinvested outside of the United States generally is not reported on their U.S.
tax returns until it is distributed back to the U.S. parent company. Said another way, a U.S.
company generally does not pay tax on foreign-sourced earnings until the earnings are
repatriated to the U.S. parent as a dividend. At first glance, the ability of U.S. companies to defer

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taxes on foreign-sourced income appears advantageous; however, many start-up operations incur
significant losses, and a U.S. company may want access to the tax benefits from a loss today. As
a result, it may be more beneficial to establish foreign operations through a foreign branch in the
early years of a venture. A foreign branch is essentially an entity that is not classified as a
corporation. Income and losses of foreign branches are immediately taxed as deductible on a

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U.S. company’s tax return.

The legal form of the foreign operations under foreign law does not dictate its
classification as a branch or subsidiary for U.S. tax purposes. Instead U.S. firms can check- the-
box in order for their wholly owned foreign entities to be treated as a branch or subsidiary by
submitting an election form to the IRS.5 A different election can be made for each foreign entity.
The check-the-box election is the same type of election that domestic entities make to be taxed as

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a partnership or corporation. The election has no effect on an entity’s classification for foreign
tax purposes.

The legal form chosen for foreign operations can affect the extent to which tax treaties
are available. Typically, operations executed through a foreign subsidiary benefit from tax
treaties while operations executed through a foreign branch do not. Additionally, subsidiaries
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have limited liability; therefore, a shareholder is liable only to the extent of the subsidiary’s
capital contribution. A branch, however, is not a separate legal entity and does not provide
limited liability to its owners. Therefore, the parent company that established the foreign branch
is fully liable for all the obligations of the branch.
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Controlled Foreign Corporations

Corporations in the United States cannot avoid U.S. taxation simply by incorporating
subsidiaries offshore. The IRS, along with authorities in most industrialized nations, has put in
place legislation that limits off-shore activity. U.S. tax law defines a foreign corporation as a
controlled foreign corporation (CFC) if 50% of the voting power6 is controlled by U.S.
shareholders.7 The CFC designation is important because it can limit the ability to defer U.S.
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taxation on certain types of income earned by foreign subsidiaries. Income earned by a CFC that
meets the definition of Subpart F income is considered a dividend paid to the U.S. shareholder(s)
in the year the income is generated, regardless of whether or not the cash is actually distributed
as a dividend.

5
Certain foreign entities, generally entities that are publicly traded, must be classified as corporations for U.S.
tax purposes.
6
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The over 50% ownership test applies to the total combined voting power of all classes of stock entitled to vote
or the total value of the corporate stock. United States shareholders of a foreign corporation will be deemed to hold
controlling voting power if they have the power to elect, appoint, or replace a majority of that body of persons
exercising the powers ordinarily exercised by the board of directors of a domestic corporation.
7
A U.S. shareholder is a U.S. person(s) that owns 10% or more of the foreign corporation. The ownership
percentages of all the U.S. shareholders are added together. If the sum exceeds 50%, then the foreign corporation is
a CFC. Under the CFC rules, a U.S. person is defined as: a citizen or resident of the United States, a domestic
corporation, a domestic partnership but not partners, or an estate or trust.

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If a foreign corporation is classified as a CFC, the following incomes may be classified as
Subpart F:

1. Income from services that are not actually performed in the foreign country
2. Income from sales to related companies

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3. Passive income from U.S. investments
4. Income from U.S. insurance risks
5. Income from an activity that is in effect related to the conduct of a U.S. business or trade
6. Income from a foreign personal holding company.

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Before the enactment of the CFC legislation, U.S. shareholders could defer U.S. taxation by
allowing Subpart F income earned by their controlled off-shore subsidiaries to accumulate in the
foreign subsidiary, resulting in substantial tax savings. Under the CFC rules, however, these
same U.S. shareholders now must report and pay tax on Subpart F income annually, regardless of
whether such income is repatriated. Even worse, capital gains earned by a foreign corporation
deemed to be a CFC often must be recharacterized as ordinary income by the U.S. shareholders
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of the CFC. Moreover, U.S. shareholders cannot legally avoid taxation simply by not reporting
the activities of their CFCs because the United States requires its residents to complete disclosure
forms regarding investments in foreign entities.

A list of key terms defined throughout this technical note is included in Appendix C.
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Appendix A
TAXATION IN A GLOBAL ECONOMY
Definitions of Resident by Other Countries

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France

1. Persons maintaining a home or principal abode in France

2. Persons who are engaged in a professional activity in France
3. Persons whose center of economic interest is in France

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4. Persons whose stay in France exceeds 183 calendar days
5. Companies incorporated in France or maintaining a registered address in France (registered
address would be stated in the articles of registration and business must be principally managed
and operated from that location)

Japan
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A resident person in Japan is either a permanent or nonpermanent resident depending on his domicile,
intention to reside permanently in Japan, or period of stay.

1. Permanent residents are defined as persons domiciled in Japan or who have stayed continuously
in Japan for more than five years. Permanent residents pay tax on worldwide income.
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2. Nonpermanent residents are persons who have spent more than a year in Japan but are not
domiciled in Japan and have no intention to reside permanently. Nonpermanent residents are
taxed on Japanese-sourced income and on foreign-sourced income paid in or remitted to Japan.

A company is a taxed as a resident if:

1. It is incorporated in Japan.
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2. It is incorporated abroad but has its headquarters or principal office in Japan.

Brazil

1. Brazilian citizens (unless they leave the country on a permanent basis)

2. Permanent visa holders
3. Temporary visa holders who spend more than 183 days in Brazil and receive employment income
from a Brazilian source
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4. Companies incorporated in Brazil with their head administrative offices in Brazil. The head office
is a place where management exercises its duties as defined by the bylaws.

Data source: Basic International Taxation, 138–151.

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Appendix B
TAXATION IN A GLOBAL ECONOMY
Examples of Foreign Tax Credit Calculations

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A U.S.-based consulting company opens an office in France. France’s territorial tax system dictates that
the U.S. company (i.e., nonresident) pays French taxes on the income earned from advising French
companies. The U.S. worldwide tax system dictates that the U.S. company (i.e., resident) pays U.S. taxes
on the income earned from advising the French companies as well as any income earned in the United
States. The U.S. company receives a FTC on its U.S. tax return for taxes paid to the French government
on income sourced to France under the U.S. tax code.

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Assume Foreign Taxable Income Equals Foreign Source Income

Scenario 1 (tUS > tFOREIGN)

1) The U.S. company earns $1,000,000 in pretax profits in the United States and France.
2) France’s tax code sources $300,000 as taxable income to France.
3) The U.S. tax code sources $700,000 as domestic and $300,000 as foreign (France).
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4) France taxes corporations at 20%, and
5) The U.S. taxes corporations at 35%.

The U.S. company owes $60,000 to the French government ($300,000 × 20%). The U.S. company owes
$350,000 to the U.S. government before considering FTCs ($1,000,000 × 35%).
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The FTC is the lesser of the foreign taxes paid ($60,000) or the U.S. taxes on the foreign-source income
($300,000*35% = $105,000). Therefore, the FTC is $60,000. The total U.S. tax liability is $290,000. The
total worldwide tax liability is $350,000. The average worldwide tax rate is 35%.

The company has a $45,000 excess limitation position.

Scenario 2 (tUS < tFOREIGN)

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1) The U.S. company earns $1,000,000 in pretax profits in the United States and France.
2) France’s tax code sources $300,000 as taxable income to France.
3) The U.S. tax code sources $700,000 as domestic and $300,000 as foreign (France).
4) France taxes corporations at 40%, and
5) The U.S. taxes corporations at 35%.

The U.S. company owes $120,000 to the French government ($300,000 × 40%). The U.S. company owes
$350,000 to the U.S. government before considering FTCs ($1,000,000 × 35%).
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The FTC is the lesser of the foreign taxes paid ($120,000) or the U.S. taxes on the foreign-source income
($300,000*35% = $105,000). Therefore, the FTC is $105,000. The total U.S. tax liability is $245,000.
The total worldwide tax liability is $365,000. The average worldwide tax rate is 36.5%.

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Appendix B (continued)

The company has a $15,000 excess FTC position.

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Assume Foreign Taxable Income Does Not Equal Foreign Source Income

Scenario 3 (tUS > tFOREIGN)

1) The U.S. company earns $1,000,000 in pretax profits in the United States and France.
2) France’s tax code sources $300,000 as taxable income to France.
3) The U.S. tax code sources $850,000 as domestic and $150,000 as foreign (France).

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4) France taxes corporations at 20%, and
5) The U.S. taxes corporations at 35%.

The U.S. company owes $60,000 to the French government ($300,000 × 20%). The U.S. company owes
$350,000 to the U.S. government before considering FTCs ($1,000,000 × 35%).

The FTC is the lesser of the foreign taxes paid ($60,000) or the U.S. taxes on the foreign-source income
($150,000*35% = $52,500). Therefore, the FTC is $52,500. The total U.S. tax liability is $297,500. The
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total worldwide tax liability is $357,500. The average worldwide tax rate is 35.75%.

The company has a $7.500 excess FTC position.

Scenario 4 (tUS < tFOREIGN)

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1) The U.S. company earns $1,000,000 in pretax profits in the United States and France.
2) France’s tax code sources $300,000 as taxable income to France.
3) The U.S. tax code sources $850,000 as domestic and $150,000 as foreign (France).
4) France taxes corporations at 40%, and
5) The U.S. taxes corporations at 35%.

The U.S. company owes $120,000 to the French government ($300,000 × 40%). The U.S. company owes
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$350,000 to the U.S. government before considering FTCs ($1,000,000 × 35%).

The FTC is the lesser of the foreign taxes paid ($120,000) or the U.S. taxes on the foreign-source income
($150,000*35% = $52,500). Therefore, the FTC is $52,500. The total U.S. tax liability is $297,500. The
total worldwide tax liability is $417,500. The average worldwide tax rate is 41.75%.

The company has a $67,500 excess FTC position.

Data source: Basic International Taxation, 138–151.

Do

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[email protected] or 617.783.7860
 t
-13- UV5244

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Appendix C
TAXATION IN A GLOBAL ECONOMY
Key Terms in International Taxation

rP
Territorial tax system
Worldwide tax system
Resident
Nonresident

yo
Domestic-sourced income
Foreign-sourced income
Foreign sourcing rules
Foreign tax credit
op
Foreign tax credit limit
Excess limitation position
Excess FTC position
Treaty
tC

Permanent establishment
Active income
Passive income
Withholding taxes
Treaty shopping
No

Antitreaty shopping provisions

Tax havens
Foreign branch
Foreign subsidiary
Check-the-box
Controlled foreign corporation (CFC)
Do

Subpart F

This document is authorized for educator review use only by Juhi Bakshi, Navrachana University until Apr 2024. Copying or posting is an infringement of copyright.
[email protected] or 617.783.7860