This month, Nina Krauthamer and Wooyoung Lee look briefly at two recent developments in tax. The first addresses pied-à-terre homes in New York City. Following tax policies adopted by certain cities in Canada, a yearly property tax surcharge will be imposed on New York City homes worth $5 million or more when (i) the home is not used as a primary residence for the owner or for a family member or (ii) is not rented out on full-time basis to an individual who uses the unit as a primary residence. The second development is reported by an anonymous source in contact with an unnamed immigration lawyer. According to the source, the I.R.S. is considering a change to Form 1040 (U.S. Individual Income Tax Return) to add two check boxes to the form. One will be used to indicate (a) whether the resident filer is or is not a U.S. citizen. The second will be used to identify w

In May, the I.R.S. announced a settlement offer for partnerships involved in disputes concerning “syndicated conservation easements.” The dispute involves the value of charitable deductions claimed in regard to the grant of an easement that prevents the owner from developing land. An easement is a legal right that allows one party to use a specific portion of someone else’s property for a specific, limited purpose without actually owning the land. The grant purportedly becomes a tax shelter when (i) multiple unrelated investors (ii) pool their money in a partnership or syndicate (iii) that is formed to acquire various parcels of undeveloped land (iv) for the principal purpose of contributing development rights to a land trust, (v) that allows the investors to claim charitable contribution deductions at purportedly inflated values far in excess of the investment in the land. In their article, Stanley C. Ruchelman and Wooyoung Lee explain the history of this typically U.S. centric tax shelter to readers outside the U.S.

“Q.S.B.S.” is a tax related acronym in the U.S. for Qualified Small Business Stock. When a start-up corporation meets certain conditions enumerated in Code §1202, noncorporate investors are offered the opportunity to derive tax-free capital gains by holding the investment for a period of time prior to a liquidity event. The greater of $10 million of gain or 10 times the taxpayer’s basis in the Q.S.B.S. – referred to as “basis loading – may be exempt from tax on exit. The tax benefit can be enhanced by creating multiple irrevocable nongrantor trusts, each formed for the benefit of a specific family member. Each trust is entitled to its own capital gain exemption, so long as the multiple trust rule of Code §643(f) is not triggered. Under that rule, multiple trusts having (i) the same grantor, (ii) substantially the same primary beneficiaries, and (iii) an income tax avoidance purpose are treated as a single trust.. Among savvy investors, the tax plan is known as “stacking.” In her article, Galia Antebi reports that Treasury Assistant Secretary for Tax Policy Kenneth Kies recently signaled that Treasury does not like stacking. The bad news is that forthcoming Q.S.B.S. guidance is expected to limit taxpayers’ ability to multiply the benefit. The good news is that basis loading is not a target – at least for now.

When individuals consider moving their tax residence to Italy, the first conversation almost always begins with a specific question. How will I be taxed in Italy? It is a question that comes most naturally to clients who have read about Italy’s special regimes. But is it the only question that should be considered? In her article, Giada Mazzola, Senior Counsel at Caldara & Associati in Milan, cautions that an adviser who treats the first conversation as a tax-rate conversation will produce an answer that may be technically correct, but may be problematic for practical reasons related to the way the client chooses to live. A more useful approach is one that asks the five questions that all begin with the letter “W” – Who? What? When? Where? and Why? An adviser will be able to fashion a tax plan and a life plan that meets the needs of the client over the long haul only when those five questions are asked by the adviser and answered by the client (i) fully, (ii) completely, and (iii) honestly.

In the past year, the British Virgin Islands (“B.V.I.”) beneficial ownership information (“B.O.I.”) reporting regime moved from consultation and transition to implementation and enforcement in ways that may affect more than companies and their beneficial owners. Areas of the law that are potentially affected, include (i) beneficial and legal ownership and title, (ii) proprietary rights, (iii) shareholder disputes, (iv) creditor rights and secured lending, (v) fiduciary obligations, (vi) registered agent duties, (vii) privacy, (viii) cross-border confidentiality, and (ix) potential public law challenges to administrative decision-making.that may affect more than companies and their beneficial owners. In his article, Joshua Mangeot, a leading advisor on the implementation of the B.V.I. economic substance and beneficial ownership reporting requirements, points out that these are areas of the law that areprovides an update on the B.V.I. position, focusing on points most likely to matter to international tax advisors, family offices, corporate and fiduciary service providers, trustees, private banks, fund managers, litigators, and end-clients using B.V.I. companies or limited partnerships in cross-border structures. It raises potential issues regarding (i) beneficial and legal ownership and title, (ii) proprietary rights, (iii) shareholder disputes, (iv) creditor rights and secured lending, (v) fiduciary obligations, (vi) registered agent duties, (vii) privacy, (viii) cross-border confidentiality, and (ix) potential public law challenges to administrative decision-making. Clearly, the adoption of the B.O.I. reporting regime can be viewed to be the equivalent of the proverbial camel’s nose under the tent.

As more families live, invest, and hold assets across multiple countries, estate planning increasingly requires coordination between legal systems that are not designed to work together. A foreign Will, alone, may not effectively administer U.S. assets, while a U.S. Will drafted in isolation can unintentionally disrupt an existing foreign estate plan. An important objective in cross-border estate planning is the creation of complementary structures that minimize probate friction, provide efficient tax planning for beneficiaries, and preserve the client’s intended dispositive scheme across jurisdictions. In her article, Allison Dolzani (i) explores several key cross-border testamentary planning considerations for global families with U.S. beneficiaries and U.S. assets and (ii) suggests planning, practical, and logistical guidance for U.S. estate administration of a foreign estate.

The Supreme Court of India issued a landmark ruling in the case of three Mauritius entities owned by the Tiger Global Group in the U.S. The three entities were private companies incorporated in Mauritius. They were formed to undertake investment activities aimed at long-term capital appreciation and investment income. They were regulated by the Mauritius Financial Services Commission (“F.S.C.”) and held Category I Global Business Licenses under the Financial Services Act, 2007. Each held a valid Tax Resident Certificate issued by the Mauritius Revenue Authority, which certified their status as tax residents of Mauritius for income tax purposes. The Indian Supreme Court was unimpressed. The arrangement had the correct form, but in the facts presented, the form lacked economic substance. Abbas Jaorawala, a Senior Director and Head-Direct Tax of Khaitan Legal Associates, Mumbai, explains all.

The taxation of dividends paid by Portuguese resident companies to nonresident C.I.V.’s has become one of the most litigated and structurally significant issues in Portuguese tax law. What began as a technical discussion concerning the scope of a domestic tax exemption has evolved into a consolidated body of caselaw confirming a structural incompatibility between Portuguese tax legislation and European Union law, in particular the principle of free movement of capital. In his article, António Gaspar Schwalbach of Spear Legal, Lisbon, revisits the Portuguese tax regime applicable to dividends distributed to C.I.V.’s, and addresses the practical consequences for nonresident funds, asset managers, and custodians, including the recovery of withholding tax and indemnity interest.

The French Finance Act for 2026 introduced several measures affecting private wealth structuring and investment strategies. Some provisions were expected and were discussed in previous legislative debates. Others target specific structuring techniques traditionally used for wealth preservation or intergenerational planning. Philippe Stebler, of Stebler Moati Avocats, Paris, explains the tax provisions that were adopted, including (i) the extension of minimum income taxation of 20% for individuals, (ii) adjustments to the tax deferral regime applicable to share-for-share exchanges occurring before cash-outs through holding companies, (iii) the imposition of a new 20% tax is imposed on certain luxury assets held through holding companies, (iv) the exclusion of luxury assets held by companies from the “Dutreil” regime, a major tax relief mechanism for business transfers by gift or inheritance, and (v) an extension of the temporary surtax for large corporations.

Nirmala Sitharaman, the Indian Finance Minister, presented Budget 2026-27 on February 1, 2026. It promises significant tax benefits for nonresident investors operating in specific sectors of the economy. Jairaj Purandare, the Chairman of JMP Advisors Pvt. Ltd., Mumbai, Bhakti Shah, a Director of JMP Advisors Pvt. Ltd. in Mumbai, and Siddhita Desai, a Senior Associate at JMP Advisors Pvt. Ltd., Mumbai, take a deep dive into the budget. Highlights include (i) expansion of the preferential time periods for I.F.S.C. and O.B.U. tax benefits, (ii) an exemption for income of a foreign company that arises in India from procuring services from a specified data center in India, (iii) an exemption for income of foreign companies arising from the provision of capital goods, equipment, or tooling to a contract manufacturer in India, (iv) an exemption for overseas income of a nonresident individual for five consecutive tax years where the nonresident visits India for the first time to render services under an approved program, (v) the adoption of a unified 15.5% safe harbor in the Indian transfer pricing rules for providing information technology services with a cap of U.S.$2.2 billion, and (vi) expansion of the benefit of an A.P.A. to cover affiliates of the taxpayer that applied for the A.P.A.

The economic substance doctrine has a long-standing history in U.S. tax law, stretching back over 90 years. Case law also developed other related doctrines, such as the business purpose doctrine and step-transaction doctrine, all of which attempted to answer the same question – was the business transaction real or was it a charade intended solely to reduce tax. Code §7701(o), entitled “Clarification of economic substance doctrine,” was enacted in 2010 to codify the preexisting regime. The legislative history provided an angel list of transactions that were not viewed abusive. For those transactions and others that did not contain hallmarks of tax avoidance, it was accepted that the economic substance doctrine was not relevant. Indeed, the statute provides that, with limited exception, if the economic substance doctrine was not relevant to a fact pattern prior to the enactment of Code §7701(o), the economic substance doctrine would not be relevant after the enactment of that provision. Then, in 2023, the I.R.S. put on its sheriff’s hat and turned the angel list into a hit list, taking the position that Code §7701(o) was a game changer. In their article, Stanley C. Ruchelman and Wooyoung Lee examine two recent cases, Liberty Global and Patel, in which the I.R.S. position was that case law was no longer relevant if planning became too aggressive. The I.R.S. won both cases, but the jury is out as to the validity of its position.

Carried interest tax regimes are under review across several countries in which major fund hubs are based. Policy trends diverge, with some jurisdictions tightening tax privileges in response to fairness and anti-avoidance debates, while others recalibrate to attract or retain fund talent and decision making substance within an investment fund context. Seeking to foster and strengthen its position as a major investment fund hub, the Luxembourg government proposed legislation to reform the existing carried interest regime. In his article, Adnand Sulejmani, a senior associate in the Luxembourg tax practice of Ashurst, explains that the existing law fostered inconsistent interpretations among practitioners regarding the taxation of carried interests and contained a sunset provision for the benefit. In comparison, the proposed legislation emphasizes tax certainty for participating investment management professionals and a permanent favorable tax regime. The proposed legislation is expected to be enacted before the end of January 2026, with an effective date as of January 1, 2026.