New U.S. Tax Rules Are a Gift to Europe - Bloomberg

New U.S. Tax Rules Are a Gift to Europe - Bloomberg



...Starting this year, the U.S. taxes foreign income above 10 percent of revenue -- deemed to be the normal rate of return on tangible assets -- at 10.5 percent. This rate will go up to 13.125 percent in 2026. Companies will only get an 80 percent credit for foreign taxes paid. A 13.125 percent tax effective tax rate applies to income from licensing U.S. parents and other intellectual property to foreign companies. These measures are specifically meant to eliminate tech companies' favorite scheme: booking all the non-U.S. revenues in a low-tax country such as Ireland, with its 12.5 percent corporate tax rate, and then paying almost all the profit to a company in, say, the Cayman Islands, as royalties for the use of intellectual property. Some companies -- Google is one example -- ended up paying almost no tax on their non-U.S. profits thanks to the scheme.