Case Study 1 – M&A:
Facts: In a $400 million deal, a US publicly traded group offered its stock in exchange for all the shares of a high-tech start-up company. Unfortunately, the technology had faults, and it was unclear whether VAT applied to the share-for-share deal.
Outcome: The deal was changed to a share purchase with borrowed cash and no VAT. The purchaser’s techies fixed the bugs. Later the VAT law was amended.
Case Study 2 – E-commerce:
Facts: An online trader bought products from China and successfully sold them to private consumers in the US and EU via Amazon.com. However they had to pay sales tax in the US, VAT in the EU as well as income tax in the US, EU and the online trader’s home country. The result was multiple taxation totalling around 60%-70% of profit.
Outcome: the business model was changed, the overall tax rate dropped to 23-25% of profit before tax.
Case Study 3:
Facts: A successful elderly businessman with family in two countries was worried about future death duties.
Outcome: A trust on certain terms was established. It avoided all death duties on capital and it deferred tax on investment income for many years.