May 2015 | Fred Gander, Principal, KPMG LLP, and Head of the U.S. Tax Practice based in London, discusses tax implications European companies need to consider when planning to invest in the United States.
My name is Fred Gander. I lead a group of about 40 U.S. tax professionals in London and Paris, and our group is focused on assisting the KPMG member firms across Europe and the Middle East in connection with their European companies and funds that are making investments, acquisitions, in the U.S. marketplace.
I have been in London practicing as U.S. tax advisor for 25 years now, and we work very closely with the U.S. international tax service line of the U.S. member firm. We're fully integrated with all of the knowledge and skills that the U.S. firm can bring to bear for our European clients as well.
Well first, there is a tremendous interest in investing into the U.S. marketplace from Europe, largely because of the relatively strong U.S. economy, low energy costs, skilled labor force and obviously the huge marketplace for them. But when it comes to tax, European investors are very concerned about whether there will be major U.S. tax reform, particularly lowering the corporate rate, which as we all know is among the highest of developed countries at 35%. And they're wondering how that tax reform might affect the structure and nature of their U.S. investments.
They're also concerned about how the U.S. may ultimately react to the OECD's BEPS proposals, which is sort of top of mind for most European tax directors and how the U.S. will implement those initiatives is a major concern for them.
Additionally, U.S. or European companies are focused on the complexity and the increasing costs of state and local tax burden in America, which many companies are not aware of when they first think about entering the U.S. marketplace.
And finally the cost of complying with the federal and state tax system in America is of tremendous concern. These European investors want to get that right, but it—they realize that it's a fairly costly exercise and they typically need some good advice.
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The above information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
The above information is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.