June 18, 2014
Canada's competitive corporate tax rates are increasingly attracting U.S. and international businesses looking to expand. Partner Sharon Geraghty provides insight into this developing trend from a transactional perspective for a Financial Post article on the subject. Below is an excerpt of the article.
Sharon Geraghty, a senior partner in the mergers and acquisitions group of Torys LLP, said she’s seeing increased interest in U.S. companies looking to use a Canadian acquisition as a stepping stone to an inversion. An American company that merges with a Canadian target company for share consideration can avoid U.S. residency for tax purposes as long as the shareholders of the Canadian target end up owning at least 20% of the shares of the new parent immediately after the acquisition.
"People are definitely kicking the tires of transactions in Canada that would assist them in doing inverse transactions," Ms. Geraghty said. She said an acquisition "is just naturally going to be a time in a company's life when they think about, 'Where do I want to be? Which jurisdiction?' It gives you an opportunity to do that."
To read the full article, click here.
To learn more about cross-border tax inversions, read "United States Inversion Opportunities" in Torys' Capital Markets 2014 Mid-Year Report.