U.S. companies repatriated over half a trillion dollars in 2018

“U.S. companies have sent home over half a trillion dollars of cash they held overseas in 2018 to take advantage of tax changes, but data suggest the pace is slowing, potentially removing a key source of support for Wall Street,” Reuters reports. “Dollar repatriation in the July-September period fell to $93 billion, around half of second-quarter volumes and less than a third of the $300 billion or so sent home from January to March, U.S. current account data shows.”
“The repatriation bonanza followed new regulations that allowed the U.S. government to tax profits accumulated overseas, regardless of where the money was held,” Reuters reports. “The change offered a powerful incentive to bring home some of the $3 trillion U.S. firms were believed to hold in jurisdictions ranging from Ireland to Switzerland, either in cash or in securities such as U.S. Treasuries.”
“But investment bank JPMorgan said the flows were on ‘a rapidly decelerating trajectory,'” Reuters reports. “The current account data shows repatriation in all sectors. Looking at just non-financial companies, JPMorgan calculates $60 billion was repatriated in the third quarter, versus $225 billion in the first quarter and $115 billion in the second quarter… Ireland, which hosts the European hubs of U.S. technology and pharmaceutical companies such as Apple and Pfizer, saw Treasury holdings drop by $40 billion between end-2017 and end-October 2018, TIC data released on Dec. 17 shows.”
Read more in the full article here.
MacDailyNews Take: After years of pent up, accumulating overseas profits, it’s hardly surprising that, after a surge in repatriation, the pace is slowing a year after the Tax Cuts and Jobs Act was signed into law by President Trump on December 22, 2017. Going forward, just normal repatriation of profits — not huge, years-worth of deferrals — will take place.
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