Energy Taxation

The energy industry continues to evolve as sectors converge and as demand, supply and consumer preferences change. For example, the global economy is shifting to lower-carbon sources of energy, coinciding with a continued focus on environmental, social and governance issues. Mayer Brown provides tax solutions that utilize new investment structures for both those newer energy technologies, which will take us into future—and the traditional energy sources that continue to power the world today. 

Our global Energy Tax practice has the experience, insight and global reach to address the tax-specific needs of participants in the oil and gas, mining and metals, power and renewable energy sectors around the globe. 

Our Energy Taxation experience includes:

• Mergers and Acquisitions
• Capital Markets
• Joint Venture Planning
• Private Equity
• Financial Products
• Bankruptcy and Insolvency
• Internal Restructuring
• International Tax
• Transfer Pricing
• Excise Taxes
• Debt vs. Equity
• Global Mobility - Employment Taxes
• Fiscal and Economic Systems
• Tax Policy and IRS Rulings and Guidance
• Energy Credits and Renewable Energy Investments
• Tax Controversy

Mergers and Acquisitions

Our tax lawyers have represented clients in many major corporate (and non-corporate) mergers and acquisitions. We are regularly involved in a wide range of domestic cross-border restructuring and related planning projects throughout the energy value chain, such as by:

• Advising on tax structure alternatives, including analyzing tax basis implications (and alternatives), current and deferred tax implications and other implications for energy-related mergers, acquisitions and divestitures.
• Preparing the tax-related provisions of merger, acquisition and disposition documents, including representations, warranties, covenants and indemnities with respect to tax matters.
• Negotiating representations and warranties insurance and tax credit insurance.
• Advising on federal and state income, employment and excise taxation of companies operating energy assets.

Capital Markets

Mayer Brown’s tax lawyers represent both issuers and underwriters in a wide variety of debt and equity offerings. We have significant experience advising energy companies throughout the value chain on capital market transactions, such as by:

• Advising and representing energy companies in evaluating various methods to go public through an initial public offering (IPO), including as a traditional IPO, using the Up-C structure, YieldCo or as a master limited partnership (MLP); accessing the public markets through special acquisition vehicle and related transactions (SPACs); and evaluating public alternatives for real estate investment trusts (REITs).
• Representing natural resource companies (including oil and gas and metals and mining) in various capital market transactions, including SPAC transactions.
• Representing and advising energy companies on certain qualification-related matters specific to certain types of public vehicles (for example, qualifying income for MLPs, asset and income tests for REITS).
• Advising public energy companies in methods to combine, merge, amalgamate, exit or go private through a variety of commercial and structural alternatives.
• Advising and representing sponsors in various MLP-related transactions (including, but not limited to, drop-down transactions, sale transactions, and the issuance of new debt or units).

Joint Venture Planning

We regularly advise energy companies on the tax aspects of joint ventures. As many energy transactions (in particular, those in the renewable energy and natural resource spaces) are effected through joint ventures, strategic alliances and partnerships, having a deep understanding of the tax implications and issues regarding joint ventures is essential. Mayer Brown’s tax lawyers advise companies, investors and other clients at every stage of the joint venture and strategic alliance life cycle, from formation, to navigating issues that arise as the business grows, to exit and monetization. We have experience:

• Representing natural resource companies and financial partners in development-focused joint ventures (i.e., carried-interest arrangements, DrillCos and similar capital-intensive joint ventures).
• Representing petrochemical and chemical clients in developmental joint ventures (for example, a joint venture for the purpose of building and operating a new chemical plant or facility).
• Representing and advising LNG (including LNG export companies) in formation of joint ventures, obtaining equity and debt financing, and securing offtake agreements.
• Representing power and utility companies in joint ventures to vertical integrate operations (for example, to acquire natural gas feedstock).
• Evaluating the tax implications of energy companies transferring property to and from joint ventures, as well as the tax implications of debt at (or below) the joint venture or strategic level.
• Advising companies and investors on entering into or exiting from (in whole or in part) joint ventures, strategic alliances and partnerships, including advice with respect to converting joint ventures from flow-through to corporate status for tax purposes.
• Advising companies on methods and alternatives to take joint ventures, strategic alliances and partnerships public.
• Designing the tax-related provisions of joint venture and other partnership agreements to reflect the parties’ economic expectations, including special allocations and provisions that simulate restricted stock and stock option economics as incentives for management.

Private Equity

Mayer Brown’s tax lawyers advise private equity sponsors and funds on the tax aspects of all stages of an energy fund’s lifecycle, from formation through the portfolio companies’ operational period to the fund’s ultimate exit and monetization. Our private equity-focused tax lawyers understand our private equity clients’ businesses and investment objectives, and we ensure that the investment structure chosen meets the specific tax needs of these clients. Our experience includes:

• Representing private equity energy funds and sponsors in connection with fund formation, including blocker structures and tax matters related to each fund’s focus and desired (or actual) investor base.
• Representing private equity energy funds on portfolio investments, including acquisition finance, due diligence, mergers and acquisitions and dispositions.
• Representing private equity energy funds in sector-specific energy tax matters, such as net profits interest, royalty or overriding royalty, or production payment or streaming transaction-related tax structures and arrangements.
• Evaluating private equity energy funds’ various monetization alternatives (including public and private monetization alternatives).
• Evaluating investors’ investments in either private equity energy funds or portfolio companies.

Financial Products

Natural resource assets and transactions (such as those involving metals or oil and gas), in particular, often involve unique and complex financing arrangements and products. Our tax lawyers regularly advise debtors and creditors on complex financing transactions and planning related to energy assets and energy transactions globally, with Mayer Brown’s world-recognized securitization practice as resource. Our experience includes:

• Representing mining and metals companies on streaming transactions and prepaid forward contracts.
• Representing oil and gas and mining and metals companies in connection with production payments (including volumetric production payments and time- or dollar-denominated production payments), as well as other forms of financing.
• Representing and advising energy companies in connection with securitization transactions.

Bankruptcy and Insolvency

Mayer Brown’s tax lawyers regularly represent lenders, equity investors and debtors in complex financial restructuring transactions and workouts, pursuant to both bankruptcy proceedings and out-of-court agreements. Our tax lawyers assist with:

• Advising energy companies on cancellation of indebtedness matters.
• Advising energy companies on workouts, debt restructurings and debt forgiveness mattes.
• Representing energy companies on bankruptcy tax and workout-related matters.

Internal Restructuring

We regularly advise companies on evaluating organization structure, including legal entity structures and relationships. Our team advises client on:

• Restructuring US investments in energy assets to achieve tax efficiencies.
• Evaluating international tax structures to identify exposures and inefficiencies.
• Analyzing tax attributes and holding company structures.

International Tax

Our tax lawyers focus on transactional, planning and consulting advice and services for energy companies globally. Our experience includes:

• Structuring operations of US multinationals outside the US to minimize the overall effective tax rate and to comply with applicable tax treaty provisions, including limitation on benefits (LOB) provisions.
• Using hybrid instruments in cross-border tax planning.
• Repatriating earnings from non-US subsidiaries and joint ventures.
• Determining the creditability of foreign taxes, including foreign windfall profit taxes, against US income taxes.
• Determining the application of the controlled foreign corporation and Subpart F income provisions to energy companies, including structures to avoid foreign base company oil related income.
• Computing taxes imposed on the sale or transfer of US energy assets or interests in US energy companies under the Foreign Investment in Real Property Tax Act (FIRPTA).
• Developing structures to avoid the maintenance by a foreign corporation of a permanent establishment in the US and structures to avoid regular federal income tax on the sale of petroleum and other products in the US.
• Analyzing the federal tax consequences of proposed inversion transactions in which a US corporation is re-domiciled as (or acquired by) a foreign corporation.

Transfer Pricing

Mayer Brown’s Transfer Pricing group employs innovative techniques in advising and representing energy clients on transfer pricing matters. Our experience includes:

• Advising on tax structuring and planning related to inbound and outbound transactions and arrangements for global and regional energy companies, including by analyzing and developing new transfer pricing structures; producing studies for US, non-US or global documentation purposes; and examining and defending studies in controversy.
• Representing energy companies in audits, IRS appeals and competent authority, as well as in the US federal courts.
• Representing energy companies in connection with US and non-US unilateral and bilateral Advance Pricing Agreements (APAs).
• Representing energy companies in litigation at all levels on transfer pricing and economic-related matters and competent authority matters.

Excise Taxes

We represent energy clients and clients in other industry sectors subject to excise taxes. Our team helps excise tax clients navigate the myriad of specialized rules affecting their excise tax positions while helping them manage risks and identify potential opportunities for available tax refunds and credits related to excise taxation. We have experience: 

• Representing clients in complex IRS examinations and IRS appeals, including by anticipating, managing and responding to excise tax issues raised by the IRS.
• Representing clients in refund litigation involving excise taxes.
• Assisting clients in the drafting of requests for technical advice.
• Evaluating and advising on excise tax positions and reduction of excise tax exposure.
• Managing risks related to excise taxation.
• Identifying refund and credit opportunities pertaining to excise taxation.
• Considering penalty exposure and pursuing opportunities for relief.

Debt vs. Equity

Our tax lawyers are well-versed in various forms of economic entitlements, including helping energy companies and investors analyze the proper classification of economic arrangements. We assist clients with:

• Evaluating various economic arrangements for purposes of tax classification.
• Classifying instruments as debt or equity for US tax purposes.

Global Mobility - Employment Taxes

Our tax lawyers advise on cross-border and global mobility-related employment tax matters. We assist by:

• Advising on how to use foreign subsidiaries to employ expatriates and third-country nationals performing services outside the US in order to minimize payroll taxes, including income tax withholding, social security (FICA) taxes and federal unemployment (FUTA) taxes.
• Advising on withholding taxes on payments to persons outside the US, including payments of effectively connected income to foreign partners and compliance with the Foreign Account Tax Compliance Act (FATCA).

Fiscal and Economic Systems

Mayer Brown’s global tax team provides customized, thorough advice to energy clients around the world related to fiscal and economic regimes. We have experience:

• Assisting companies in evaluating the fiscal system (including government take provisions) for a particular country or multiple jurisdictions.
• Assisting companies in evaluating existing or proposed investments by analyzing the fiscal and tax regimes of target jurisdictions.
• Assisting governments in evaluating fiscal or tax regime improvements or changes.

Tax Policy and IRS Rulings and Guidance

Our team of lawyers and advisors have been very successful in assisting clients with legislative and regulatory guidance to achieve their tax policy goals, including by drafting proposed tax legislation and regulations and meeting with government officials from the US Internal Revenue Service (IRS) and other areas of the US Department of Treasury and with congressional staffers. We have experience:

• Requesting and obtaining private letter rulings from the IRS and other taxing authorities on tax issues facing energy companies.
• Assisting energy companies with requests for published guidance (as well as other representation before the IRS and the Department of the Treasury).
• Representing energy companies in connection with tax policy matters.

Energy Credits and Renewable Energy Investments

Our tax team advises clients on a variety of renewable energy-related investments and tax credits, including production tax credits and investment tax credits. We assist clients by:

• Structuring renewable and other energy projects to qualify for and monetize US production tax credits, investment tax credits and other subsidies and incentives associated with all resources, including wind, solar, fuel cells, geothermal, hydroelectric, biomass, biofuel, carbon capture and sequestration and other renewable energy projects, thus enhancing various financing options, including tax-subsidy arrangements in cross-border transactions through our worldwide network of tax lawyers. 
• Providing advice related to tax equity structures, including partnership flips, sale-leaseback transactions, inverted lease structures and other joint ventures or financing arrangements.
• Structuring projects to qualify for and monetize various production-related tax credits, such those available for enhanced oil recovery.

Tax Controversy

Our controversy experience includes:

• Developing proactive strategies for potential tax controversy matters by stress testing transactions or reorganizations that may draw scrutiny from federal and state tax authorities.
• Assisting in large case examinations conducted by federal and state taxing authorities, including by formulating comprehensive strategies that result in successful resolutions. 
• Handling cases in administrative appeals, such as cases before the IRS Appeals Office, in arbitration or in mediation. 
• Litigating more than 100 US tax cases, including important energy industry cases.
• Representing taxpayers appealing lower court decisions, participating directly in briefing and arguing seminal tax cases.