A Matter of Semantics: Validus Reinsurance Invalidates Foreign-to-Foreign Withholding
29 June 2015
Mayer Brown Legal Update
On May 26, 2015, the DC Court of Appeals issued its opinion in Validus Reinsurance. In this case, the court held that the federal excise tax on reinsurance could not be applied to a foreign-to-foreign retrocession transaction because the US Internal Revenue Service did not establish that Congress intended to override the “presumption against extraterritoriality” for US laws. In the attached Mayer Brown alert, Mark Leeds of the New York office examines the decision and whether the reasoning of the court could apply to withholding on FDAP income and withholding required under the Foreign Account Tax Compliance Act (FATCA).