International

tax services for

private capital
Global tax trends affect private capital
The relaxation of restrictions on foreign private investment, including
real estate, as well as lower interest rates/growth in developed
countries have prompted increased cross-border flow of private
capital for higher rates of return. It is no longer uncommon for a
large family office to manage a portfolio of investments in dozens
of countries across multiple continents. Private inbound investment
in the US remains strong due to relative stability and the high level
of liquidity offered by the US market. While private investment in
emerging countries recently has been on a downward trend, we
expect this to eventually reverse as countries continue to encourage
inflows of foreign capital and investors continue to seek diversified
portfolios, with returns hedged across multiple markets.
Private investments may be held directly through proprietary fund
structures or through third-party managed alternative investment
funds. As a result, our high-net-worth clients and their family
offices continue to identify cross-border tax and compliance issues
as the main area of risk due to a lack in centralized expertise and
resources. The tax issues affecting private capital in tax year 2017-
18 are interdependent with the issues and trends affecting the asset
management industry as a whole:
4. Some companies utilize multiple service providers to support tax
needs in multiple locations across the globe but lack in-house
expertise to oversee these resources:
Multiple withholding agents (prime brokers, fund managers,
trustees) may have different approaches to administering
withholding taxes this requires reconciliation and refund
filings.
L
ocal law firms assisting with structuring, regulatory
compliance and transaction planning may not be aware of US
(or non-US) tax sensitivities and how legal planning impacts
all aspects of a high-net-worth individuals tax planning and
compliance.
F
amily offices or CPA practitioners providing individual income
tax advice to principals and executives may lack expertise
pertaining to cross-border tax issues.
5. An exponential rise in global tax regulatory enforcement
is expected in 201718 as a result of the ongoing global
transparency and information exchange initiatives.

1. A major tax reform of the cross-border aspects of the US federal
income tax system is highly likely in the near term.
2. Managed accounts/fund-of-one investing are increasingly popular
structures to use to mitigate investment manager risk.
We note a steady rise in crossover between immigration and
tax enforcement customs and border agencies in multiple
jurisdictions have programs in place to share information on
frequent travelers with the tax authorities.

3. There has been a continuous increase in volume and complexity

of the global compliance reporting requirements for nonresident
investors. This includes but is not limited to:

Foreign Account Tax Compliance Act (FATCA) and FATCA-like

reporting

Informational tax reporting for US investors (Forms 5471,

8621, 8858, etc.)

Foreign Investment in Real Property Tax Act (FIRPTA) and

FIRPTA-like reporting for real estate investments

D
ocumentation requirements for debt instruments issued by US
corporations

A
n increasing number of fund managers beginning to provide
more detailed data to facilitate tax reporting needs of non-US
investors in some instances, this flashes out under-reporting
in prior years due to lack of information, which now needs to
becorrected

2 International tax services for private capital

How we can help
US ITS Private Capital
EY International Tax Services (ITS) professionals in the US have Ernst & Young LLP
experience in providing tax planning and tax compliance services to
Services network
high-net-worth individuals and family offices. Below are examples of
services EY professionals provide:
Jonny Lindroos EYs Family Office practice
Initial and ongoing reviews of the individuals/familys tax posture to Partner
ITS Leader, Northeast New York Bobby Stover
identify rate reduction/planning opportunities
Partner
Chris Housman Americas Family Office Leader
Modeling for cross-border aspects of the pending US tax reform,
Partner
including improving foreign tax credit utilization and Section 962 ITS Leader, FSO New York Andrew Vinciguerra
election planning Executive Director
Seda Livian Private Client Services, Family
Planning for cross-border real estate investing (investment in and Partner Office Services
outside of the US by US and non-US individuals and entities as well Financial Services-Tax, New York
as families with multiple residence/citizenship status) EYs Private Client Services
Irina Pisareva
International tax aspects of estate and gift planning Principal John Cook
ITS Wealth and Asset Partner
Taxable presence management for frequent business travelers and Management, New York Private Client Services
individuals maintaining residences in multiple jurisdictions
Lucas Rachuba Joseph Bulger
Global tax controversy management and support Principal Principal
ITS Wealth and Asset Private Client Services
Planning for fund-of-one and managed accounts investing Management, San Francisco
Marianne Kayan
Planning for cross-border angel and private equity investments Martin Milner Senior Manager
and club deals, including structuring, due diligence and, if needed, Principal Cross-Border Tax Planning Leader
National Tax, Washington, DC for Private Clients
transfer pricing planning and assistance with obtaining advance tax
rulings Zsuzsanna Kadar
Executive Director
Due diligence to facilitate investing in third-party managed funds ITS Wealth and Asset
Due diligence and international tax planning related to strategic Management, New York
acquisitions of target companies Alastair Campbell
Senior Manager
Tax advisory services to determine tax implications of investing Northeast New York
in publicly or widely offered securities and cross-border debt,
including assistance with tax residency certifications, withholding Allen Stenger
Senior Manager
tax reconciliation and reclaims
National Tax, Washington, DC
Mapping out cross-border international tax reporting requirements
Maria Martinez Hernando
and assistance with country-by-country reporting (CbCR) Senior Manager
compliance and the preparation of complex informational reporting National Tax, Washington, DC
for US tax returns, including assistance with the preparation of form
Trae High
side letters to request tax compliance information from investee
Senior Manager
funds and portfolio companies ITS Wealth and Asset
Management, New York
FATCA assistance and documentation
Marina Baughman
Planning for cross-border charitable giving and art collecting
Senior Manager
International tax aspects of the ownership and operation of aircraft ITS Quantitative Services
Wealth and Asset Management,
Chicago

Ernst & Young LLP 3

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2017 EYGM Limited.

All Rights Reserved.

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ED None
This material has been prepared for general informational purposes only and is
not intended to be relied upon as accounting, tax or other professional advice.
Please refer to your advisors for specific advice.

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