External CFO Explains: What is Corporate Inversion, Who Needs It, and How to Do It Right?

External CFO Explains: What is Corporate Inversion, Who Needs It, and How to Do It Right?

One of the intriguing moves in the financial world is corporate inversion. This process involves a local company becoming a subsidiary of a foreign company registered in another country (often the United States). The shareholders of the local company transfer their ownership to the parent company, which then becomes the owner of the original Israeli company.

There are several reasons for executing a corporate inversion. A significant part of them is related to raising funds for the company’s development. In such cases, corporate inversion is done to create more favorable conditions for potential investors. For example:

  • Many investors prefer to invest in a company incorporated in a country where the laws and tax regulations are more familiar to them.
  • Obtaining tax benefits for investing in a local company.
  • Certain investors are subject to investment restrictions in companies registered outside their country.
  • And more…


Corporate inversion is a business and financial event with broad implications for the company and its owners. It may trigger a tax event, affect the identity of the board members, and sometimes even require a change in the country of residence of the shareholders. 

Israeli regulations recognize the need to occasionally perform corporate inversion. If the request is submitted on time and correctly, the state may accommodate the shareholders regarding taxation and other issues, although it imposes significant restrictions. For example, the company’s main intellectual property must remain owned by the Israeli company. If the intellectual property is transferred to the new foreign company, an additional tax event will occur for the company and its owners.

So how do you perform a corporate inversion correctly, with minimal hassle and tax events? At Danoy, we assist many of our clients with corporate inversion events. Thanks to the knowledge we have gained from working with high-tech companies and international startups, when we anticipate a corporate inversion may occur, we begin the necessary preparations to ensure the process is as effective and beneficial as possible for the company and its shareholders.

If you are considering performing a corporate inversion for your company, contact us.

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