Investing Repatriated Cash? It’s Complicated.

  • February 09, 2018

CEOs and CFOs of U.S.-based multinational companies favored a good news/bad news approach on recent earnings calls when they discussed the new U.S. tax regime’s short-term impacts (large, one-time balance sheet hits from repatriation tax: temporary bad news) and longer-term effects (higher profits and the chance to invest those gains: much better news).

The complete story, when it comes to investing repatriated income, is more complex, as a new TP Week article indicates (free trial available). As a legal tax expert cited in the article points out, even the term “repatriation” actually “is a bit of a misnomer.”

Bernadette Pinamont and Nancy Manzano, in our Chief Tax Office, are among the tax experts cited in the article that shed light on the issues U.S. multinationals need to address. This includes determining how best to invest their cash once they satisfy the new law’s repatriation tax provision.

“Once the tax is recorded as a liability, companies must still perform a detailed analysis in order to determine where to invest the cash portion of the deemed repatriation income inclusion,” according to Bernadette and Nancy, who identify a range of considerations that affect this determination. These issues include “withholding and other non-US tax considerations, treaty considerations, individual country-by-country considerations, debt and equity considerations, regulatory and lending issues, and general business and cash forecasting needs.”

While those executives appear right on the mark with their sunny, longer term projections, their tax functions have some work to do over the short-term in order to help make those forecasts come to fruition.

Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.

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Tricia Schafer-Petrecz

Public Relations and Social Media Lead

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Tricia Schafer-Petrecz manages Vertex's public relations and social media functions. Tricia has over 20 years of experience managing public relations, corporate communications and generating thought leadership for the financial services and technology industries. Tricia has a B.A. in english, a B.A. in communications and a Master's degree in Communications from La Salle University.

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