The U.S. 1% excise tax on stock repurchases may apply to share buybacks made by foreign issuers more often than they think

Written by Adrien Soumagne and Ron Creamer

Published on the European Tax Blog

Beginning in 2023, publicly-traded U.S. corporations are subject to a 1% excise tax on the fair market value of the stock repurchases made during the taxable year. The enacting statute also applies the excise tax when a U.S. company repurchases stock of its foreign listed parent.

Despite receiving comments to the contrary, IRS proposed regulations retain a broad interpretation of this rule, potentially applying the excise tax to many stock buybacks performed by foreign issuers when they are funded by a U.S. affiliate. Read more