구조화신탁(STARS) 거래를 이용한 국제조세전략 사례 연구

This study examines a transaction known as Structured Trust Advantaged Repacked Securities(“STARS”) conducted between BNY and Barclays in 2001. The STARS transaction is a type of tax avoidance scheme referred to as “Foreign Tax Credit Generators”. Foreign Tax Credit Generators are transactions designed to claim foreign tax credits even when there was no double-taxation. The STARS transaction conducted between BNY and Barclays consisted of two parts: creating a STARS structure and carrying out of STARS loan. BNY, a US-based bank, had income producing assets. Net income generated from the income producing assets shall be subject to tax at a rate of 35% in the US. However, BNY converted this US source income into foreign source income by creating a STAR structure. BNY formed a Delaware trust and funded the trust with the income producing assets. BNY then established a wholly owned subsidiary in the UK and appointed it as a trustee of the trust. The trustee was a UK resident for UK tax purposes. The trust income of the trustee was treated as UK income under the US-UK income tax treaty. As such, this trust income was treated as foreign source income of BNY for US income tax purposes. By converting US source income into foreign source income, BNY could claim a foreign tax credit in the US for taxes paid by the trustee in the UK. Barclays, a UK-based bank, entered into a series of complex arrangements with BNY. Barclays entered into sale and resale arrangements of the trust unit, a zero coupon swap arrangement and a guaranty and security arrangement with BNY. The net economic effect of these arrangements was to create a secured loan to BNY from Barclays. However, Barclays was liable for taxes on the trust income in the UK as a trust unit holder according to the legal structure of the arrangements. The STARS allowed BNY to claim foreign tax credits for taxes paid by its UK subsidiary, the trustee. Meanwhile, Barclays was able to get a tax refund for taxes paid by the trustee. Barclays shared some of the tax benefits indirectly with BNY by entering into the zero coupon swap agreement with BNY. In conclusion, the STARS transaction resulted in the decrease of tax revenues of the US government by the amount of foreign tax credit claimed by BNY and sharing of the relevant tax benefits between BNY, Barclays, and the UK governments. The Internal Revenue Service disallowed the foreign tax credits claimed by BNY and reclassified the income earned on the income producing assets as US source income. BNY challenged the IRS in the Tax Court. The IRS argued that the STARS transaction lacked economic substance. BNY, in contrast, contended that the STARS transaction had economic substance because BNY entered into the transaction to obtain low-cost funding for its banking business and that it reasonably expected to earn a pretax profit from the transaction. In 2013, The Tax Court held that BNY was not entitled to the tax benefits generated by the STARS transaction because the transaction lacked economic substance. The STARS transaction has implications from various perspectives. From the tax strategic perspective, the STARS transaction is a tax planning exploiting mismatches between tax rules and treatments in different jurisdictions. It is noteworthy that this scheme converted US source income into foreign source income, considered the tax implications for all the parties involved in the transaction as mentioned in Scholes et al.(2014), and exploited derivatives, the zero coupon swap, when designing the structure. From the legal perspective, the STARS transaction has implications regarding the application of the economic substance doctrine. After the STARS transaction became a controversial issue, the US and UK governments actively encountered the STARS transaction and other possible arrangements substantially similar to the STARS. The way both governments encountered tax avoidance schemes suggests the Korean government the need for broader application of the economic substance doctrine as well as the increased consistency of tax rules with different jurisdictions. Lastly, the STARS transaction has implications from the political perspective. Foreign tax credit generator scheme including the STARS transaction started to arise due to the structural and inherent deficiency of the foreign tax credit system. In order to restrict tax avoidance and evasion exploiting foreign tax credits, it is suggested to adopt territorial tax system which may reduce asymmetric information problem. It is forecasted that territorial tax system may also facilitate the restrictions of artificial arrangements designed for tax avoidance and thus reduce tax compliance and administration costs.