Management Consulting

In a rapidly evolving tax environment, a multinational company faced significant challenges during a cross-border merger and acquisition (M&A) due to complex regulations and rising tax risks. The client was particularly concerned about the implications of the Organization for Economic Co-operation and Development (OECD) Pillar Two and Global Minimum Taxation, which 46% of dealmakers identified as a major threat to deal success. The intricate nature of tax laws, especially regarding intellectual property and cross-border structures, posed a risk that a single unexpected tax treatment could derail the value of the transaction. To address these niche issues, a tailored tax insurance solution was implemented. This bespoke policy was designed to protect the client against potential tax liabilities that could arise from challenges by tax authorities regarding the intended tax treatment of the transaction. The tax insurance not only covered losses, including taxes payable, interest, and penalties, but also provided a backstop for the investment should the tax position fail to qualify under different interpretations. This strategic risk capital allowed the client to navigate the complexities of the deal with greater confidence. As a result of this tailored solution, the client was able to proceed with the transaction without compromising on capital certainty. The tax insurance provided clarity and coverage, enabling the business to execute the deal successfully while mitigating the risks associated with unforeseen tax liabilities. This approach not only facilitated the transaction but also unlocked value that might have otherwise been lost due to the uncertainties in the tax landscape.