Private Equity Firms May Eye Offshore Investing Under ‘GILTI’ Relief

U.S. shareholders with small interests in private equity and venture capital firms could be safe from a tax on a new category of foreign income under proposed IRS rules, which might spur cross-border investment.

The Internal Revenue Service offered a reprieve to certain shareholders of partnerships on the tax overhaul’s levy on global intangible low-taxed income, designed to curb multinationals from shifting profits out of the U.S. tax base.

Proposed (REG-101828-19) and final rules (T.D. 9866) narrow the reach of the GILTI tax by eliminating the hit on certain individual shareholders.

Those shareholders must ...