Introduction and Overview -

The Tax Cuts and Jobs Act (“TCJA”) resulted in the most sweeping changes to the Internal Revenue Code (the “Code”) in decades and will result in countless articles and commentary to address the many changes to taxpayers of all types.1 Indeed, the international tax changes alone will be the subject of many of those writings, as the framework under which the United States taxes U.S. and non-U.S. businesses on U.S. and non-U.S. income has shifted considerably. This article focuses on several of those changes and their particular, though perhaps not isolated, impact on one category of taxpayers - a multinational affiliated group of companies that includes a bank and/or a registered securities dealer (each such company, a “Financial Institution” and such group, a “Financial Group”).2 Both U.S. parented and non-U.S. parented Financial Groups will be discussed in this article. Certain provisions apply primarily to U.S. parented Financial Groups (or to a U.S. parented subgroup of a non-U.S. parented Financial Group), while other enacted changes affect both U.S. and non-U.S. parented Financial Groups. The international tax changes impact many types of taxpayers, and their application generally can have similar results as those for Financial Groups. However, the somewhat unique footprint of Financial Groups’ global operations, the fact that the commodity they deal with is money itself, and, not least, the extensive non-tax regulatory rules by which they must operate combine so that the international changes discussed below may be expected to impact Financial Groups in manners unlike any other industry, and sometimes, disproportionately unfavorably.

Originally published in the International Tax Journal - March/April 2018.