Daily Tax Update - October 16, 2014: AbbVie Recommends Stockholders Vote Against Inversion

AbbVie Recommends Stockholders Vote Against Inversion:  AbbVie Inc.’s Board of Directors has recommended that stockholders vote against a proposed merger with Shire Plc.  The company attributed the recommendation to the impact of the Treasury’s proposed inversion regulations.   A statement released yesterday stated “the breadth and scope of the changes, including the unexpected nature of the exercise of administrative authority to impact longstanding tax principles, and to target specifically a subset of companies that would be treated differently than either other inverted companies or foreign domiciled entities, introduced an unacceptable level of uncertainty to the transaction.”  Under the terms of the agreement with Shire, AbbVie may be subject to a break-up fee of approximately $1.635 billion.

EU Refers Belgium to ECJ for Discriminatory Taxation:  Today, the European Commission referred Belgium to the EU Court of Justice for discriminatory taxation of collective investment undertakings (CIUs) established in other member states of the EU.  Under Belgian law, the tax rate on certain CIUs established in other member states is higher than the rate applied to similar CIUs established in Belgium.  The Commission found this to be discrimination constituting a barrier to the free movement of financial services and capital.

Miscellaneous Guidance Released:
Revenue Ruling 2014-28 provides various prescribed rates for federal income tax purposes, including the applicable federal interest rates, for the month of November 2014.