Update on the New Tax Law What Do the Changes Mean for You?

Panelists Elizabeth Drigotas Principal, Deloitte Tax LLP Bob Rothery Director KPMG Prisco Morelos Senior Global Mobility Manager eBay

Impact on individual tax liabilities and company costs – tax rates Change in law Updated tax brackets and reduced top rate to 37% on income >$500k (not married)/$600k (married filing joint) Alternative Minimum Tax (AMT) remains, but with increased exemptions Changes will sunset on December 31, 2025 Considerations Changes to individual income tax rates will impact company costs for tax-equalized assignments US hypothetical taxes may decrease Tax reimbursement costs could increase or decrease depending on the mix of assignees inbound and outbound to the US, and also to high- or low-tax countries Next steps Conduct cost modeling to understand impact on cost of current program Update assignment costs accruals Update US hypothetical tax withholding calculations Plan for need to extend post-assignment tax services due to increased foreign tax credit carryforwards Refresh global mobility strategy to align cost structure, review global mobility policies to evaluate potential need to revisit provisions, and consider alternatives to home-based TEQ approach

Impact on individual tax liabilities and company costs – personal exemptions and family credits Change in law Personal exemptions repealed Child tax credit expanded to $2,000 per child and $500 per non-child dependent per family; phased out with AGI greater than $400k (married) Child credit requires SSN Children ineligible due to lack of SSN may still qualify for nonrefundable $500 credit Changes will sunset on December 31, 2025 Considerations Tax benefits of applying for Individual Taxpayer Identification Number (ITIN) are reduced Business travelers from nontreaty countries will be taxable from day 1 of US presence due to repeal of personal exemption Next steps Weigh costs of obtaining ITINs against potential tax benefits Conduct cost modeling to understand impact on cost of current program and update assignment costs accruals Update US hypothetical tax withholding calculations

Impact on individual tax liabilities and company costs (cont Impact on individual tax liabilities and company costs (cont.) – deductions Change in law Standard deduction increased to $12k/$24k Mortgage interest is deductible on first $750k of debt for primary and secondary residence Home equity debt deduction is repealed Substantial limits on the ability to deduct state and local taxes; deduction allowed of up to $10,000 for state and local income, sales, and/or property taxes No deduction allowed for foreign property taxes paid on nonbusiness property Changes will sunset on December 31, 2025 Considerations Existing mortgages grandfathered New law applies to debt incurred after December 15, 2017 Property taxes for personal residences maintained in foreign jurisdiction not deductible Changes to itemized deductions directly impact tax liability of assignees, on both actual and hypothetical basis, with significant impact for individuals in high tax states Next steps Review tax equalization policy to consider how itemized deductions currently handled for hypothetical purposes and whether policy should be updated Update hypothetical tax calculations Educate impacted assignees on changes

Impact on individual tax liabilities and company costs (cont Impact on individual tax liabilities and company costs (cont.) – moving expenses Change in law IRC § 217 repealed through 2025, with exception of certain military moves Moving expenses paid by individuals not deductible Moving expenses paid or reimbursed by employer from 2018-2025 cannot be excluded from income; considered taxable benefit and included in income for employee Considerations Taxable wages will increase for all employees where moving expenses are paid by employer Impact to both domestic and international moves Employer can choose to fund additional tax cost for employee via gross-up Payroll and benefit systems need to be updated to accurately reflect moving expenses as taxable wages; determine if eligible compensation for pension/401(k) plan Moving expenses may still be subject to preferential tax treatment in foreign jurisdictions Next steps Update payroll and benefit system, design process to collate costs Quantify cost impact of change and advise business units Calculate gross-up cost for existing arrangements Review moving policies to determine if changes are required or desired by company; communicate changes to employees

Impact on business travelers Change in law Corporate income tax rate reduced from maximum 35% rate to flat 21% rate for tax years beginning after 2017 Personal exemptions repealed Considerations Business travelers from non-treaty countries will be taxable from day 1 of US presence due to repeal of personal exemption Decrease to corporate income tax rates may incentivize companies to identify additional foreign-sourced income to effectively utilize foreign tax credits For certain industries (e.g., professional services) employers may be able to increase the amount of non-US income by better monitoring where revenue-producing employees work Increased access and use of travel data may have ancillary benefits of assisting the organization in managing value- added and hotel occupancy taxes Next steps Identify revenue-producing individuals who travel internationally Assess whether there are excess foreign tax credits, which may make additional tracking advantageous Identify travelers from non-treaty countries

Impact on the Affordable Care Act Change in law Functionally eliminates mandate on individual taxpayers to maintain minimum essential coverage beginning after 2018 Considerations Applicable large employers must still provide affordable minimum essential coverage to 95% of full-time employees and provide statutorily required notices (i.e., Forms 1094-B, 1094-C, 1095-B, 1095-C) The continued operation and viability of the Affordable Care Act remains a matter of ongoing debate and activity in Washington Next steps Stay abreast of potential law or regulatory changes

Example with Itemized Deductions 2017 TCJA Compensation 145,000 LTCG/Qualified Dividends 2,000 Moving Expense Deduction NA Student Loan Interest Dedn -1,080 AGI 145,920   State/Local Income Tax 13,000 Property Tax 12,000 10,000 Mortgage Interest 15,000 Differences (e.g. HE int.) -1,000 Contributions 2,500 Limitation Itemized Deductions 42,500 26,500 Standard Deduction 12,700 24,000 Allowable Deductions Exemptions 16,200 Allowable Exemptions Taxable Income 87,220 119,420 Income Tax 13,083 18,011 Personal Credits -200 -4,000 Net Income Tax 12,883 14,011 Alt. Min. Tax Total Income Tax Married couple filing jointly with 2 children

Example with itemized deductions 2017 2018 TCJA Compensation 145,000 LTCG/Qualified Dividends 2,000 Moving Expense Deduction NA AGI 147,000 State/Local Income Tax 13,000 Property Tax 12,000 10,000 Mortgage Interest 15,000 Differences (e.g., HE int.) -1,000 Contributions 2,500 Limitation Itemized Deductions 42,500 26,500 Standard Deduction 12,700 24,000 Allowable Deductions Exemptions 16,200 Allowable Exemptions Taxable Income 88,300 120,500 Income Tax 13,353 18,249 Personal Credits -150 -4,000 Net Income Tax 13,203 14,249 Married couple filing jointly with 2 children under age 17

Example with no itemized deductions Married couple filing jointly with 2 children under age 17 2017 2018 TCJA Compensation 145,000 Other Ordinary Income LTCG/Qualified Dividends 2,000 Moving Expense Deduction NA AGI 147,000 Standard Deduction 12,700 24,000 Exemptions 16,200 Limitation Allowable Exemptions Taxable Income 118,100 123,000 Income Tax 20,803 18,799 Personal Credits -150 -4,000 Net Income Tax 20,653 14,799

Example with reimbursed moving expenses Married couple filing jointly with 2 children under age 17 2017 2018 TCJA Compensation 145,000 160,000 Other Ordinary Income LTCG/Qualified Dividends 2,000 Moving Expense Deduction NA AGI 147,000 162,000 Standard Deduction 12,700 24,000 Exemptions 16,200 Limitation Allowable Exemptions Taxable Income 118,100 138,000 Income Tax 20,803 22,099 Personal Credits -150 -4,000 Net Income Tax 20,653 18,099

Example with unreimbursed moving expenses Married couple filing jointly with 2 children under age 17 2017 2018 TCJA Compensation 145,000 Other Ordinary Income LTCG/Qualified Dividends 2,000 Moving Expense Deduction -15,000 NA AGI 132,000 147,000 Standard Deduction 12,700 24,000 Exemptions 16,200 Limitation Allowable Exemptions Taxable Income 103,100 123,000 Income Tax 17,053 18,799 Personal Credits -900 -4,000 Net Income Tax 16,153 14,799

Example with foreign earned income exclusion Married couple filing jointly with 2 children under age 17 $100,000 foreign assignment allowances 2017 2018 (TCJA) Compensation 245,000 Other Ordinary Income LTCG/Qualified Dividends 2,000 Foreign Earned Income Exclusion -116,394 -118,674 AGI 130,606 128,326 Standard Deduction 12,700 24,000 Exemptions 16,200 NA Limitation Allowable Exemptions Taxable Income 101,706 104,326 Income Tax 27,117 23,932 Personal Credits -4,000 Net Income Tax 19,932

Example with tax equalization Married couple filing jointly with 2 children under age 17 $100,000 foreign assignment allowances Foreign income tax rate: 40% 2017 2018 (TCJA) Compensation 245,000 Hypothetical Tax -20,653 -14,799 Other Ordinary Income LTCG/Qualified Dividends 2,000 Foreign Earned Income Exclusion -116,394 -118,674 AGI 109,953 113,527 Taxable Income 81,053 89,527 Income Tax 21,334 20,380 Personal Credits -4,000 Foreign Tax Credit -21,334 -16,380 Net U.S. Income Tax Foreign Income Tax 89,739 92,080 U.S. Hypothetical Tax Net Tax Cost before Gross-up 69,086 77,281

US tax reform: Individual income tax rates Current Law Tax rate Single Heads of Household Married Filing Joint Married Filing Separate 10% $0 - $9,525 $0 - $13,600 $0 - $19,050 15% $9,526 - $38,700 $13,601 - $51,850 $19,051 - $77,400 25% $38,701 - $93,700 $51,851 - $133,850 $77,401 - $156,150 $38,701 - $78,075 28% $93,701 - $195,450 $133,851 - $216,700 $156,151 - $237,950 $78,076 - $118,975 33% $195,451 - $424,950 $216,701 - $424,950 $237,951 - $424,950 $118,976 - $212,475 35% $424,951 - $426,700 $424,951 - $453,350 $424,951 - $480,050 $212,476 - $240,025 39.6% $426,701+ $453,351+ $480,051+ $240,026+ New Law Tax rate Single Heads of Household Married Filing Joint Married Filing Separate 10% $0 - $9,525 $0 - $13,600 $0 - $19,050 12% $9,526 - $38,700 $13,601 - $51,800 $19,051 - $77,400 22% $38,701 - $82,500 $51,801 - $82,500 $77,401 - $165,000 24% $82,501 - $157,500 $165,001 - $315,000 32% $157,501 - $200,000 $315,001 - $400,000 35% $200,001 - $500,000 $400,001 - $600,000 $200,001 - $300,000 37% $500,001+ $600,001+ $300,001+

US tax reform: Key provisions Current law New law Individual Alternative Minimum Tax (AMT) 26%/28% on alternative minimum taxable income Retained; exemption increases to $70.3K/$109.4K; phaseout thresholds increased to $500K/$1M; indexed for inflation Sunsets December 31, 2025 Standard deduction and personal exemptions $6,350/$12,700 standard deduction $4,050 exemption for each member of household, phased out for higher AGIs $12k/$24k standard deduction No personal exemption Mortgage interest deduction Deduction on first $1M of debt used to secure primary or secondary residence, or first $100k of home equity debt Deduction on first $750k of debt used to secure primary or secondary residence; applies to debt incurred after 12/15/17 No deduction of home equity debt Deduction for moving expenses Qualified moving expenses are deductible by taxpayers for certain work-related moves; qualified moving expenses paid by employer are excluded from taxable income Repeal moving expense deduction and exclusion for moving expense reimbursement Exception for military moves

US tax reform: Key provisions (cont.) Current law New law State and local tax (SALT) and property tax deduction State and local income and property taxes or sales taxes fully deductible Deduction of up to $10k ($5k MFS) for the aggregate of nonbusiness (1) state and local property taxes, and (2) state and local income taxes or sales taxes; no deduction for foreign nonbusiness property taxes Prepayments of state and local income tax for 2018 made in 2017 are treated as paid as of last day of 2018 Sunsets December 31, 2025 Child tax credit and family tax credit $1K credit per child under age 17; phase out for AGI >$75K/$110K $2K credit per child under age 17 and $500 per nonchild dependent; no family credit Phase-out increased to $400k (joint) Maximum refundable credit of $1.4K per qualifying child; credit for nonchild dependent is nonrefundable SSN required for refundable portion of credit

US tax reform: Key provisions (cont.) Current law New law Individual health Insurance mandate (Affordable Care Act) Those who fail to maintain health coverage owe penalty of 2.5% of AGI, or $695 per adult/$347.50 per child in 2017 Penalty lowered to zero after December 31, 2018 Corporate tax rates Four rate brackets with 35% rate for taxable income over $10M Tax rate of 21% effective tax years beginning after 2017 Deferral of income for qualified equity grants Compensatory shares are taxable upon vesting, regardless of ability to sell shares; 83(b) inclusion elections do not apply to stock options or restricted stock units (RSUs) Employees in private companies can defer taxation up to five years form date of vesting in stock resulting from exercise of stock options or RSU settlement Limitation on excessive employee remuneration 162(m) deduction limit includes exceptions for commissions and performance-based compensation Expands limitations on deduction of compensation paid to covered employees under 162(m), expands definition of covered corporations, excepts certain preexisting contracts

US tax reform: Key provisions (cont.) Current law New law Fringe benefits Allows certain programs to be excluded from employee compensation Repeals exclusion for qualified bicycle commuting reimbursements, limits what can be provided as employee achievement award (not cash equivalents) Provides that employers cannot deduct amounts relating to transportation/ commuting benefits (effective 2018), cannot deduct expenses regarding meals for convenience of employer or employer eating facilities (effective 2026) Repatriation of foreign income Foreign income earned by a foreign subsidiary of a US corporation is not subject to US tax until income is distributed as a dividend to a US shareholder US shareholders of a foreign subsidiary that is at least 10% US-owned will have to include in income for subsidiary’s last taxable year before 2018 the shareholder’s pro rata share of historical earnings and profits (E&P) of the subsidiary to the extent such amounts have not previously been subject to US tax. This income will be taxed at special rates and may be spread over a period of eight years.

Contact Information Robert Rothery Elizabeth Drigotas Director, Global Mobility Services Principal Washington National Tax Washington National Tax KPMG San Diego Deloitte Tax LLP (858) 750-7329 (202)-879-4985 rrothery@kpmg.com edrigotas@deloitte.com Prisco Morelos Senior Global Mobility Manager eBay (408) 376-8590 primorelos@ebay.com

This presentation and the related panel discussion contains general information only and the respective speakers and their firms are not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. The respective speakers and their firms shall not be responsible for any loss sustained by any person who relies on this presentation.