Page 15 - TACC 2025 Program

Dirk Cockrum Mark Fiegener Alan Gutierrez-Arana Justin Stenberg
Managing Director Director Principal Partner

SPECIFIC TAX LAWS CREATING COMMON ISSUES

■ OECD/G20 BEPS Initiatives: These rules aim ■ U.S. Passive Foreign Investment Company: These
to prevent tax avoidance by large multinational rules are a trap for the unaware, particularly startup
companies. companies outside the U.S.
■ U.S. Global Intangible Low-Taxed Income Rules: ■ Foreign Financial Assets: U.S. Treasury requires
These rules affect how U.S. companies are taxed on special reporting where U.S. persons have interests
undistributed foreign earnings. in foreign bank and financial accounts, with potential
missed filing penalties of $10,000 or more.
■ U.S. Foreign-Derived Intangible Income: This
is a tax benefit U.S. corporations may achieve ■ EU Anti-Tax Avoidance Directive: This includes
when exporting goods and services to non-U.S. measures like interest limitation rules and controlled
customers. foreign company rules, affecting U.S. companies in
the European Union (EU).

ADDITIONAL COSTS

International expansion plans should be considered other expenses. It is not uncommon for fees related
in the annual budget process. Costs can increase to tax due diligence to increase significantly when
significantly due to the additional complexity in tax entering a new country and incrementally higher as
compliance with new regulations, new audits, and expansion includes more countries.

ESG Requirements

U.S. businesses expanding internationally should consider local, state/provincial, and federal ESG and
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sustainability regulatory requirements, such as the EU’s Corporate Sustainability Reporting Directive,
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the EU’s Corporate Sustainability Due Diligence Directive, and Mandatory sustainability reporting under
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the International Financial Reporting Standards’ (IFRS) sustainability reporting standards.
Financial Reporting

When acquiring a foreign entity, it is important to understand the financial reporting requirements of
the newly acquired entity and the parent entity. Certain countries require statutory audits for entities
exceeding a revenue threshold, with some thresholds as low as $10,000. These statutory audits may
require financial statement audits under an accounting framework different from the parent.

In addition to national requirements of the respective countries, lender requirements may change under
the new organizational structure. These changes in financial reporting among frameworks may also impact
valuations prepared for acquisitions.

1 Directive (EU) 2022/2464 Directive (EU) 2024/1760 What to Know: Global Sustainability Disclosure Requirements [October 23, 2024]
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