Pillar 2 Watch Out: Is there a US Sandwich in Your Structure?

As a result of acquisitions, tax planning, or other anomalies, many US-based multinational enterprises (MNEs) have a “US sandwich structure” somewhere in their org chart. A US sandwich structure is where a US-parented group holds a lower-tier US entity or branch (collectively referred to as the “US sandwich entity”) through one or more foreign intermediate entities (including a foreign partnership or disregarded entity). Even if the US sandwich entity is insignificant or dormant, the Pillar 2 impact could be quite significant if a foreign intermediate entity is in a jurisdiction with an Income Inclusion Rule (“IIR”) in effect for 2024. ...