Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies covered Core Insights - The focus of the report is on the implications of Section 899 of the One Big Beautiful Bill Act (OBBBA), which could impose penalty taxes on foreign companies operating in the US if their home country is deemed to have a "discriminatory" tax system [1][10] - The proposed tax increase is phased in over four years, starting with an additional 5 percentage points on top of the current US corporate tax rate of 21%, potentially reaching a total increase of 20% [2][15] - The report highlights that the fundamental impact of Section 899 on European equities should be relatively small at the index level, with an estimated decrease of approximately 0.5% in Stoxx 600 earnings due to the incremental tax [5][31] Summary by Sections Section 899 Overview - Section 899 is part of the OBBBA and targets foreign entities operating in the US with potential penalties if their home country's tax system is considered unfair [2][12] - The tax applies to a wide range of entities, including corporations, individuals, partnerships, and government-controlled entities [13] Expert Insights - A US tax expert indicated that if Section 899 is enacted, it would impose higher taxes on both corporate earnings and passive income for companies with significant ownership from individuals or corporations in affected countries [4][19] - The expert noted that mitigation measures are limited, and the effective tax rate could increase significantly for many companies [4][26] Implications for European Equities - The report suggests that while the index-level impact is limited, the company-level impact could be concentrated among those with high US revenue exposure, particularly in sectors like Media, Health Care, and Food & Beverage [5][35] - Approximately 20% of Stoxx 600 revenues come from the US, but only about 30 companies have more than 50% US sales exposure [5][35] - The report anticipates that Section 899 may encourage diversification away from US assets due to increased policy uncertainty and higher tax burdens [36][38]