RESTRUCTURING MULTINATIONAL CORPORATIONS THROUGH TERRITORIAL OPTIMIZATION
The Swiss Principal model has become an effective means to optimize the structure of multinational companies on a regional basis, maximizing efficiencies by restructuring EMEA-area procurement, distribution and sales activities around a “Swiss Principal” company, which becomes the counterparty to the company’s vendors and customers. The Swiss Principal structure takes advantage of Switzerland’s favorable tax rates and advance tax rulings, business-friendly environment, advanced body of commercial law that provides certainty in strategic planning, banking center status, low tax rates, central location in the heart of Europe (combined with independence from the European Union regulatory overlay and European monetary union), and federal cantonal structure, all of which have contributed to the increasing popularity of Swiss Principal structures. Asia Principal structures are also possible, and can be included in the same restructuring.
Owen D. Kurtin of Kurtin PLLC, a New York City-based law firm, recently led as outside counsel a three-year Swiss Principal restructuring for a U.S.-based industrial and technology public corporation with operations in over thirty countries and a multibillion dollar market capitalization. The new corporate structure will greatly enhance the company’s yearly profitability.
This website offers a free, downloadable case study with diagrams on the strategic, legal, tax and regulatory aspects of implementation of the Swiss Principal model for that multinational corporation. The case study discusses how to plan and allocate resources for the Swiss Principal project, which parts of the corporate structure to include in the Swiss Principal restructuring and which to exclude; liquidation of superfluous corporate structures and disposition of their assets; reorganizing the corporate structure in a supply chain and tax-efficient manner and in compliance with other countries’ laws and regulations; how to structure inter-company agreements that allow sharing and consignment of inventory without breaching the Swiss Principal model; and, in general, what worked, what did not work, details, nuances and practical pointers on how a Swiss Principal structure was successfully implemented in a globally-based, multibillion dollar public company.
We will be happy to discuss on a preliminary basis with companies contemplating a Swiss Principal model restructuring how such a project might be undertaken for them. The case study should also be of use to those who, while not necessarily implementing a Swiss Principal corporate structure, are interested in rationalizing and streamlining their companies to improve performance and profitability both in the U.S. and in other countries.
A link to Kurtin PLLC’s main website, which offers other resources to complement the case study, is also available here.
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