March 2019 – Tax Cuts and Jobs Act (TCJA) can heavily impact Swiss residents
if they are considered as Section 958(a) shareholders
U.S. taxpayers continue to analyze and adapt to the new international taxation regimes introduced by the Tax Cuts and Jobs Act (TCJA), including the Section 965 inclusion, global intangible low-taxed income (GILTI), foreign derived intangible income (FDII), and the base erosion anti-abuse tax (BEAT). The aim of this article is to highlight potential tax consequences for Swiss residents with US passports/green cards arising from the repeal of the downward attribution rules of Section 958(b)(4) of the US Internal Revenue Code (US IRC). The new US tax law modifies the attribution rules that apply for purposes of the anti-deferral rules of subpart F under US IRC. The second part of the article discusses potential planning solutions for mitigating the tax exposure rising from the repeal.