Santander Holdings USA, Inc. v. United States

Case Updates

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The U.S. Chamber filed an amicus brief urging the First Circuit to decline the government’s invitation to expand the economic substance doctrine in order to manipulate application of the foreign tax credit. The Chamber’s brief asked the court to affirm the district court’s decision that a bank’s economically sound transaction with a foreign lender complied with the Internal Revenue Code because the bank paid foreign taxes on the transaction and complied with the regulatory requirements entitling it to a U.S. tax credit against its foreign taxes.

The brief argued that the judge-made economic substance doctrine should be applied narrowly, especially where Congress has expressed a clear intent to avoid double taxation, which is undisputedly the case with respect to the enactment of the foreign tax credit. Additionally, the brief urged the court to reject the government’s attempt to re-characterize foreign tax consequences in an economic substance inquiry, consistent with the rulings of other courts of appeals.

Scott P. Martin of Gibson, Dunn & Crutcher LLP served as counsel for the U.S. Chamber of Commerce on behalf of the U.S. Chamber Litigation Center.