Feb 9, 2016
In Sandra Rubin’s recent article for Lexpert Magazine, the author reports on several notable cases of U.S. corporate tax refugees relocating their parent companies to Canada. That’s welcome news in a corporate landscape that has seen some corporate law firms struggling with a “shrinking client pool.” Beyond structuring the initial tax inversion transactions, firms can assume the ongoing legal work for those companies’ former U.S. head offices. According to Emmanuel Pressman, partner and Co-chair of Osler’s Corporate Group, “When foreign companies make Canada their domicile that definitely creates opportunities for developing new client relationships.”
Pressman adds: “It’s a potential cause for celebration when a new issuer comes to Canada, there’s no question about it.”
This trend may be short lived if the Democrats win the next U.S. presidential election and also manage to regain control of the Senate or House of Representatives. The Obama administration has already tried to discourage this practice by putting anti-inversion tax rules into effect in 2014, prohibiting the use of third-country parents. And while this practice seems to have only bolstered the number of U.S. parent companies that have migrated north of the border, both of the leading democratic candidates have slammed tax inversions and vowed to do much more to stop them. Former Secretary of State Hilary Clinton says she’d block such deals and place an exit tax on American corporations that leave the U.S. for tax purposes. Senator Bernie Sanders echoed that sentiment by calling those companies “corporate deserters.”
However, until the rules change, Canadian corporate law firms can look forward to more tax inversions.
Read Sandra Rubin’s full article, “Tax inversions feed Canadian law firms” in Lexpert Magazine, February 2, 2016.