Opinion ID: 779340
Heading Depth: 2
Heading Rank: 2

Heading: The treaty.

Text: 42 UnionBanCal argues that the temporary regulation is invalid because it violates the 1975 United States-United Kingdom Tax Convention. 53 Article 24 of the treaty, Nondiscrimination, generally prohibits either state from subjecting nationals of one residing in the other to more burdensome taxation than their own resident nationals. The subsection dealing with corporate subsidiaries likewise provides that enterprises of one state owned or controlled by residents of the other shall not be subjected to ... any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned state are or may be subjected. 54 Thus an American subsidiary of a British corporation can't be taxed more heavily than an American subsidiary of an American corporation. 43 UnionBancCal's argument is that, because Standard was British and it was American, they wound up worse off than if they had both been American. That doesn't violate the Treaty. UnionBancCal doesn't show that the United States imposed more burdensome taxation or requirements on British-owned subsidiaries than American-owned subsidiaries, which is what the treaty addresses. It was merely fortuitous that, because the British and American tax authorities could not agree on how to recognize the deferred loss, Union-BanCal and Standard were worse off than if they had been entirely of one country or the other. 44 True, UnionBanCal never got tax recognition of its loss on its sale of the loan portfolio to Standard because of the American statute and temporary regulation. But it hasn't shown that it would have been treated any differently had Standard been American. It would have been treated the same. And discrimination against foreign-owned subsidiaries is all that the nondiscrimination clause at issue protected it against. 45