Recently, there has been a surge of corporate expatriation transactions in which a U.S.-resident multinational corporation combines with a smaller foreign business to become a foreign-based company. Examples include Mylan Laboratories (MYL), Medtronic (MDT), and AbbVie (AABV).

Instead of a U.S. company owning a foreign subsidiary, now a foreign-based company owns the U.S. company. (For this reason, this type of transaction has been called an inversion.) Often, this restructuring does not shift the company’s production, employment, sales, or even management. And it has little to do with where the shareholders of the corporate group live. But it can substantially reduce the firm’s tax liability.

Read more