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In brief

On 23 July 2020, the Treasury Department (“Treasury”) and the Internal Revenue Service (“IRS”) published final regulations under Section 951A providing guidance with respect to the high-tax exception, which excepts certain ‘high-taxed’ income from being otherwise taxed as “Global Intangible Low-Tax Income” (“GILTI”). The final regulations maintain the same foreign tax rate threshold to be eligible for a high-taxed income exclusion while simultaneously modifying operational rules that may affect a U.S. individual’s decision to pursue the exclusion. In conjunction with these final regulations, Treasury and the IRS issued new proposed regulations conforming aspects of the Subpart F high-tax exception with the newly finalized GILTI high-tax exception, and providing for a single high-tax exception election under Section 954(b)(4).


Additionally, on 9 July 2020, the Treasury and the IRS released final regulations under Section 250 related to the deductions offsetting income that is taxed as “Foreign Derived Intangible Income” (“FDII”). These regulations finalize proposed regulations, which were originally published on 6 March 2019, and apply to years beginning on or after 1 January 2021. The final regulations retain the basic approach and structure of the proposed regulations, with certain revisions.

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Simon Beck is a partner and chair of the North America Wealth Management Group at Baker McKenzie's New York office. Simon is an international tax and trust lawyer with vast experience working in the world's trust and financial centers. He has also practiced in Miami, London, Monte Carlo and Madrid, and was head of Legal, Compliance and Trust & Fiduciary Services for Coutts, one of the world’s leading private banking institutions, prior to joining Baker McKenzie. Simon lectures regularly on trust, financial service and compliance issues at global wealth management and international trust and estate planning conferences around the world.


Megan is a member of Baker McKenzie's Tax Practice Group based in the Miami office. She focuses her practice on international inbound and outbound tax consulting and compliance for businesses and high net worth individuals.


Daniel Hudson — a member of the Firm’s Tax Practice Group in Miami — practices mainly in the areas of international tax planning for multinational entities and high net worth individuals. He has authored several publications for Tax News and Developments and has spoken at Firm-sponsored trainings and conferences on tax issues. Active in the Firm’s pro bono activities, Daniel spearheads Baker McKenzie’s annual visit to the Camillus House Soup Kitchen, where the Firm serves dinner to hundreds of homeless and economically disadvantaged individuals.