1. Case Study 1: global anti-avoidance
Robert Langston
Jonathan Bicher

2. Anti-avoidance rules - overview
Controlled foreign company (CFC) (Action 3)
Beneficial ownership and anti-conduit
Limitation on Benefits and domestic GAARs (Action 6)
Hybrid entities and instruments (Action 2)
Disclosure (Action 12)

3. Current structure X Ltd Y Ltd
X Ltd owns valuable intellectual property which is licensed to Y Ltd for use in its trade
X Ltd
Royalty
Non-treaty Country X
Local Country Y
Y Ltd

4. Proposed structure X Ltd Z Ltd Y Ltd
X Ltd grants a license to a new company Z Ltd located in a treaty country, and Z Ltd then grants a license to Y Ltd
Z Ltd has no other source of income
The royalty paid by Z Ltd to X Ltd is equal to 50% of the royalty received by Y Ltd
The corporate income tax rate in Country Z is lower than in Country X
X Ltd
Royalty
Non-treaty Country X
Z Ltd
Royalty
Treaty Country Z
Local Country Y
Y Ltd

5. Questions Will the royalty be deductible in Country Y?
Will withholding tax relief be available under the Country Y / Country Z double tax treaty; consider
Limitation on benefits
Beneficial ownership
Anti-conduit
Will any local anti-avoidance rules apply in Country Y
What disclosure requirements will there be for the arrangements in Country Y
Would the position be different if Z Ltd was a disregarded entity from the perspective of X Ltd?