2018 US Tax Year End Planning: Tax Reform

Some of the most significant changes this year, related to our US clients who had control over a foreign corporation. 


Last updated: 2 November 2018

Changes to the taxation of Controlled Foreign Corporations (CFCs)

There were two new taxes introduced, the “transition tax” and the “GILTI” tax. Not only did the changes result in significant tax liabilities for some of our clients, it also meant that we had to consider restructuring of the business from a tax perspective to avoid some very punitive global tax rates.  

We would urge anyone who has a foreign (non-US company) to seek advice as soon as possible to determine whether they have the most appropriate structure from a US / UK tax perspective.

The new Global Intangible Low Taxed Income (GILTI) tax affects US owners of non-US corporations. The earnings of the company are potentially subject to a minimum US tax each year from 2018. With individual owners, it is possible that tax rates could be punitive as the ability to offset foreign tax credits against GILTI tax appears to be limited for individuals.

What should I do?

Have your CFC structures reviewed and keep up-to-date with any further guidance that comes from the IRS in relation to these rules. Calculate if there are any tax savings that could be achieved with a check-the box election, an IRC Section 962 election, or creating a US C-Corp. 

We recommend that individuals seek professional advice where appropriate before taking any action, so please fill out the form below if you have any questions. 

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