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Covering foreign employees in US retirement plans is a complex area and mistakes can be costly. Robert H Masnik and Karen Field of KPMG’s Washington National Tax Compensation and Benefits practice discuss the issues

Influenced significantly by methods based on the OECD transfer pricing guidelines, many countries are adopting and supplementing transfer pricing rules to compete and protect their tax base. This column highlights major transfer pricing developments around the world during the past few months. By Bill Dodge and Giovanni DiCenso, Deloitte & Touche, Washington, DC

The US has failed to recognize the European Union as a single economic entity for tax purposes. This raises a number of potential problems for US and EU companies. By Stephen E Fiamma and Dave Lewis of Allen & Overy's US Tax Group, London

The Singapore government's proposed tax reform package has met with approval from tax advisers who believe that it will go some way towards boosting the country's ailing economy and increasing foreign investment. The Economic Review Committee (ERC), which was set up by the government in December 2001, announced a series of proposed changes on April 11 this year. The government will announce whether it intends to adopt these proposals, which are part of the report called Restructuring the Tax system for Growth and Job Creation, on May 3 when the budget is delivered.

Tax authorities in a number of countries are increasingly focusing on transfer pricing issues related to stock options. Ernst & Young transfer pricing and stock-based compensation professionals have collaborated to review the pitfalls and opportunities with particular reference to the UK, the US and Germany. By Gareth Green and Jeremy Glover in London and Stanley Veliotis in New York

Allen & Overy has poached a Haarmann Hemmelrath partner to set up a tax practice in Germany and increased its tax partnership in Paris. Eugen Bogenschütz is joining the Frankfurt office as head of German tax. Bogenschütz, who was a partner at Haarmann Hemmelrath for eight years, and previously worked at Price Waterhouse, concentrates on cross-border M&A transactions and restructurings. Allen & Overy approached Bogenschütz over six months ago with the offer, at a time when he was not actively seeking to leave Haarmann Hemmelrath, and he was tempted by the opportunity of building a tax practice from scratch as well as the firm's international reach. He explained:

Last month he gave businesses a sweetener by announcing tax measures to aid both big and small business. But now, UK chancellor of the Exchequer, Gordon Brown's budget has received a backlash of criticism from corporates angry at once again being forced to fund public spending.

The Andersen network has continued to disintegrate this month with offices across the world joining rival firms. Deloitte and Touche and Ernst & Young appear to be the big winners so far, with KPMG, who originally set out to acquire the entire Andersen network outside the US, lagging far behind. On April 4 Deloitte & Touche signed a memorandum of understanding with Andersen in the US to acquire a ?significant' number of its US tax staff.

DATE TYPE OF DEAL VALUE TARGET ACQUIRER/ ISSUER HOLDER/ UNDERWITER ADVISERS TO TARGET ADVISERS TO ACQUIRER/ ISSUER ADVISERS TO HOLDER/ UNDERWRITER 22/3/02 recommended offer EUR 8.5 billion ($7.63 billion) Innogy (UK) RWE (Germany) n/a Linklaters, London, Mike Hardwick, Keith Wilson Allen & Overy, London, David Lewis, Kevin Cummings; Hengeler Mueller n/a 22/3/02 spin-off and transfer of manaagment £2 billion ($2.9 billion) n/a Guy Hands (UK) Nomura International (Japan); Terra Firma Group (New Zealand) n/a Linklaters, London, Jan Birtwell, Neal Todd, Conor Hurley; Germany, Martin Krause; in-house, Colin Rowlinson, Chris Barnes SJ Berwin & Co ,London, Mark Hainsworth; Andersen/Garretts, London, John Cuillinance, John Maxey, Darren Docker, Judith Powell; Germany, Klaus Brinckmann 1/4/02 acquisition $1.1 billion Trendwest Resorts Inc (US) Cendant Corp (US) n/a Heller, Ehrman, White & McAuliffe, New York, Pamela Charles Brown, Teresa Maloney Skadden, Arps, Slate, Meagher & Flom, New York, James Tandler, Katherine Bristor n/a 2/4/02 acquisition $5.04 billion Enterprise Oil (UK) Royal Dutch/Shell Group (Anglo/ Dutch) n/a Herbert Smith, London, Janette Sawden Slaughter and May, London, Martin Walker, Sara Luder n/a 5/4/02 merger $662 million n/a DSP Group Inc's IP licensing division (US) Parthus Technologies plc (Ireland) n/a Morrison & Foerster, New York, Steven Ruskin, Marjorie Elkin, Steven Meier; Freshfields Bruckhaus Deringer; Arthur Cox Hale and Dorr, Boston, Bill Caporizzo, Kimberly Wethly, Bill Benjamin; KPMG 5/4/02 lease financing $3 billion 54 aircraft Crossair Limited, now known as SWISS (Switzerland) n/a n/a Debevoise & Plimpton, Frankfurt, Friedrich Hey; New York, Burt Rosen, Robert Staffaroni n/a 8/4/02 debt deal £740 million ($1.07 billion) n/a Eurotunnel (UK/ France) Agent banks n/a Herbert Smith, London, David Martin, Nikol Davies n/a 11/4/02 merger $685 million Herbalife International Inc (US) Whitney & Co; Golden Gate Capital (US) n/a Gibson, Dunn & Crutcher, Los Angeles, Paul Issler, Elizabeth Bluestein, David West, Cathy Cleveland Kirkland & Ellis, Chicago, Jeffrey Sheffield n/a 12/4/02 acquisition £875 million ($1.27 billion) 1869 pubs Enterprise Inns plc (UK) Laurel Pub Holdings Ltd (UK) Freshfields, Bruckhaus Deringer London, Francis Sandison, Susan Porter, Stephanie Young CMS Cameron McKenna, London, Simon Meredith, Alison Hughes n/a 16/4/02 bond offering $7.3 billion n/a Morgan Stanley Dean Witter & Co (US) Morgan Stanley & Co Inc (US) n/a n/a Davis Polk & Wardwell, New York, Po Sit, Chrisian Wimpissinger 17/4/02 demerger undisclosed n/a Halfords (UK) Boots plc (UK) n/a n/a Slaughter and May, London, Tony Beare, Ed Denny