Tuesday, September 2, 2014

What is inversion, and why are U.S. companies using it to move offshore?

In last weeks business news we saw the major story of U.S. fast food company Burger King finalizing a merger with Canadian powerhouse Tim Hortons in which Burger King will use this deal to shuttle its company headquarters out of the U.S., and into Canada for all intents and purposes.  The objective here of course is to get out from under the draconian corporate tax structure the U.S. currently operates, with the name for this type of merger being called an inversion.

An inversion is where a company in one country merges with a company in another, and the primary company then transfers its corporate offices and address to the new country.  It is primarily used for tax purposes and has been the catalyst for dozens of former American corporations moving their HQ’s out of the U.S. over the past twenty years.

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