Mar 201809:00 BST

An Overview of the US's Transition Tax

An Overview of the US's Transition Tax
On Tuesday, April 3rd, Taxlinked hosted a webinar dedicated to the US's transition tax and its effects on international taxation.

For taxable years of deferred foreign income corporations (DFICs) beginning before January 1, 2018, all US taxpayers are required to calculate a transition tax on their offshore earnings and begin paying it to the Treasury as early as April 15, 2018.

Our event took place on Tuesday, April 3rd at 12:00 pm BST.

Questions covered included:

  • Who does the transition tax affect?
  • In which cases would the transition tax apply to non-corporate US shareholders, including individuals?
  • How is the transition tax calculated?
  • Is there any way to lessen the burden imposed by this transition tax?
  • Will the imposition of this mandatory transition tax lead to any cases of double taxation?
  • Can foreign tax paid on dividends out of the CFC be used to offset the transition tax?
  • How will the transition tax affect renunciations of US citizenship?
  • Are there any ways to use existing tax treaties to argue that the transition tax should not apply?
  • What impact could this tax have if applied to non-resident individuals who are US shareholders of CFCs? More specifically, what is the impact on the individual? And what is the impact on the tax base of the country where the CFC is incorporated (the local economy)?
  • Recent news articles unsurprisingly indicate that the impact of the transition tax could be devastating for affected taxpayers. Is it really that bad at the coalface? And how will clients handle this?
  • Can anyone demonstrate how the tax would be calculated after reviewing a balance sheet?
  • Will cryptocurrencies such as Bitcoin be considered cash equivalent in terms of transition tax calculations?

Our US Tax Experts

John Richardson, Tax Lawyer, Toronto, Canada

John Richardson, Lawyer, Toronto, Canada

John Richardson is a Toronto, Canada based lawyer. He provides advice and assistance for  U.S. citizens and Green card holders who do not reside in the United States. He specializes in U.S. citizenship relinquishment, Green Card expatriation and assisting U.S. persons with their compliance obligations. You can contact him on his website

Dr. Karen Alpert, Finance Professor, University of Queensland Business School, Australia

Dr. Karen Alpert, Finance Lecturer, University of Queensland Business School, Australia

Dr. Karen Alpert lectures Finance at the University of Queensland Business School in Australia. Dr Alpert’s qualifications include a PhD in Finance (University of Queensland), Masters in Tax (University of Southern California) and MBA (University of California, Berkeley). Her research explores the impact of taxation and government regulation on financial decision making.

Submit Your Follow-Up Questions on the US Transition Tax

If you have any follow-up questions for our panelistsl, please submit them below.


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