Proposed Regulations for Qualified Foreign Pension Funds that are Exempt from U.S. Tax on Disposition of U.S. Real Property Interests

Posted in Investments, Israel, Tax

The Foreign Investment in Real Property Tax Act of 1980, as amended (FIRPTA), imposes tax on gain realized on disposition by nonresident alien individuals or foreign corporations (non-U.S. persons) of a U.S. real property interests (USRPI) by treating such gain as effectively connected with the conduct of a U.S. trade or business by such non-U.S. persons (effectively connected income, or ECI). The FIRPTA tax is enforced by requiring the purchaser (or other transferees) of a USRPI from a foreign person to withhold an applicable percentage (generally 15%) of the gross proceeds and pay over to the Internal Revenue Service (IRS). On June 7, 2019, the IRS and the Treasury Department issued proposed regulations (the Proposed Regulations) on Section 897(l) of the Internal Revenue Code (the Code) that provides an exemption from the FIRPTA tax for qualified foreign pension funds (QFPF) on gains or losses attributable to dispositions of USRPI. The Proposed Regulations provide rules for determining the qualification for the exemption under Section 897(l), including certain organizational structures that are eligible for such exemption. The Proposed Regulations also clarify certification and documentation requirements with respect to withholding obligations under Sections 1445 and 1446. In addition, the Proposed Regulations provide certain anti-avoidance rules by imposing conditions on the sale of certain investment vehicles wholly owned by a QFPF.

Click here to read the full GT Alert.

Illinois Senate Gaming Expansion

Posted in Gaming, Israel, Technology

Introduction (by Joey T. Shabot)

Israeli technology companies providing software, payment, and other solutions for the gaming industry are closely watching regulatory trends related to online gaming in different jurisdictions throughout the world. This legal update from our colleagues in Illinois may point to a trend in some U.S. states to permit online and mobile wagering.

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The Illinois Senate passed the gaming expansion bill June 2, 2019, and sent the legislation to the governor’s desk. This GT Alert provides a general summary of the gaming expansion bill followed by a more detailed review of the Sports Wagering Act (the Act). We will continue to monitor the response to the legislation in the coming days and will update this Alert as clarifications and new interpretations become available. The Senate has 30 days from June 2 to present the bill to Governor Pritzker; however, we anticipate that the governor will receive the bill shortly. It is also expected that the governor will not wait the allotted 60 days to sign the bill into law.

Click here to read the full GT Alert.

Latest U.S. Trade Restrictions Target Huawei

Posted in China, Homeland Security, Technology, telecommunications

During the week of May 13, 2019, the Trump administration announced two new measures that have the potential to cut off certain foreign companies, particularly Chinese technology company Huawei Technologies Co., Ltd., from the U.S. technology and telecommunications market. These provisions follow legislation passed in 2018 prohibiting U.S. government agencies and contractors from using Huawei products and reflect a heightened concern regarding the national security risks associated with non-U.S. entities’ involvement in the U.S. technology and telecommunications sectors.

On May 16, 2019, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) filed a Federal Register notice adding Huawei, along with 68 of Huawei’s non-U.S. affiliates, to its Entity List. The Entity List identifies companies that BIS reasonably believes to be involved in “activities contrary to the national security or foreign policy interests of the United States.”

On May 15, 2019, President Donald Trump issued an Executive Order on Securing the Information and Communications Technology and Services Supply Chain. The new Executive Order (E.O.) establishes the legal authority to prohibit certain transactions involving “information and communications technology or services” where a foreign party acquires an interest in property subject to U.S. jurisdiction. While the E.O. does not mention any specific country or company, recent events strongly suggest that Chinese companies generally, and Huawei specifically, may be targets of the new E.O.

Click here to read the full GT Alert.

Retail Innovation Booming in Israel

Posted in Emerging Growth Companies, Israel, Retail, Tel Aviv, Venture Capital

Retail innovation is booming in Israel and corporate executives best take notice, as reported in a recent Forbes article. Hardly the first time Forbes has taken notice, this most recent article was inspired by a major retailer CEO’s visit to Israel. The article lists the staggering numbers boasted by Israel’s impressive retail technology start-up scene and advises, “if you are a retail executive, and you have yet to visit to Israel, it is time to book your ticket.”

Greenberg Traurig is the only major international law firm with a multidisciplinary, registered office in Tel Aviv and serves as a gateway for Israeli businesses and entrepreneurs seeking opportunities around the world, as well as for companies exploring opportunities within Israel. Our Emerging Technology Practice offers clients the global reach of Greenberg Traurig’s international network, connecting Israel’s booming technology scene to major commercial retail investors across the globe.

For more on emerging tech in Israel, click here.

New DOJ Guidance: What Is Your Compliance Program Worth?

Posted in Anti-Money Laundering, Banking & Finance, Banking & Financial Services, compliance, Corporate

On April 30, 2019, to provide greater transparency into prosecution decisions, the U.S. Department of Justice (DOJ) published “The Evaluation of Corporate Compliance Programs,” an update to its February 2017 guidance on the same topic. The new guidance complements the principles previously described by DOJ’s Fraud Section that prosecutors should consider when “conducting an investigation of a corporation, determining whether to bring charges, and negotiating plea or other agreements.” According to the Justice Manual, those factors include “the adequacy and effectiveness of the corporation’s compliance program at the time of the offense, as well as at the time of a charging decision” and the corporation’s remedial efforts “to implement an adequate and effective corporate compliance program or to improve an existing one.” The new guidance attempts to provide more detail as to how DOJ will evaluate corporate compliance programs in this context while better harmonizing the Criminal Division’s guidance with the rest of the department.

The guidance is organized in a comprehensive fashion under three basic, overarching questions that compliance departments should consider:

  1. Is the corporation’s compliance program well designed?
  2. Is the program being applied earnestly and in good faith? In other words, is the program being implemented effectively?
  3. Does the corporation’s compliance program work in practice?

Click here to read the full GT Alert.

New USPTO Guidance May Clear Path for More Technology Patents

Posted in Intellectual Property, patents, Technology

On January 4, 2019, the United States Patent and Trademark Office (USPTO) released new Patent Examiner Guidance (Guidance) for subject matter eligibility. The updated guidance could benefit any technology patent applicant who has a computer-related invention — from smartphones to artificial intelligence — and who has previously had difficulty acquiring patents under the USPTOʼs procedures for determining patent subject matter eligibility.

The Guidance is intended to provide some much-needed direction for technology patent applicants on how to formulate and prepare their patent applications to avoid potential subject matter eligibility issues. In addition, to the extent subject matter eligibility is raised by an examiner during the review process, the Guidance is intended to now allow patent applicants clearer understanding, and provides a pathway for responding to subject matter eligibility rejections under 35 U.S.C. § 101, particularly for those in the software sector.

To learn more about the Guidance’s impact on technology innovators, read the TechCrunch Extra Crunch article, “New USPTO Guidance May Clear Path for More Technology Patents,” co-authored by James J. DeCarlo and Chinh H. Pham.

UPDATE: Israel to Join Countries Qualified for E-2 Treaty Investor Visa

Posted in Immigration, Israel

As previously announced on our blog, the E-2 Treaty Investor Visa will soon be available to Israeli nationals wishing to make a substantial investment in or set up a business in the United States. USCIS announced on April 22 that eligible Israeli nationals already in the United States in a lawful nonimmigrant status, as well as their dependents who are also already in the United States, can request a change of status to E-2 classification starting May 1, 2019.

The U.S. Embassy in Israel announced on April 11, 2019, that it will implement the U.S. E-2 Investor Visa for Israeli nationals beginning May 1, 2019.

For more on immigration, click here.

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