Arrival of Brexit puts treaty claims at risk

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January 2020


Brexit – the United Kingdom’s departure from the European Union – took effect at 11pm UK time on January 31. While this development has many social, political, and economic implications, one seemingly collateral effect is its potential impact on qualification for treaty benefits for some UK-parented groups under certain US income tax treaties.

The takeaway

Amid the varied consequences potentially wrought by Brexit, taxpayers relying on applying the benefits of a US income tax treaty based on having a UK tax resident parent company that satisfies certain requirements may no longer qualify. The same may shortly be true for US, Canadian, and Mexican-parented groups. Taxpayers should review their structures and evaluate the need for further analysis and alternative ways to satisfy the requirements for treaty eligibility.

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Bernard Moens

US International Tax Inbound Leader, PwC US

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