On 23 September 2014, the IRS published a Notice announcing new rules designed to restrict the availability of certain US tax benefits which are sometimes obtained by US companies that have undergone an “inversion”. According to the US Treasury, the new rules “will significantly diminish the ability of inverted companies to escape US tax” and, more fundamentally, will mean that, for some companies, “inversions no longer make economic sense”. The motivation behind the latest move is clear: according to the Joint Committee on Taxation (a non-partisan committee of the US Congress), the US could stand to lose around USD20 billion in tax revenues over the next decade if inversions are allowed to continue in their current form (see side-panel – “Why are inversions so popular in the US?”). Although the new rules are not retroactive, their impact on inversions which have yet to close may be significant; particularly where a material US tax saving is one of the key drivers of the transaction. Read more.