Burger King has an $11 billion deal to buy Tim Hortons and create the world's third-largest fast-food company. The move would put the headquarters of the new company in Canada.

WASHINGTON — Burger King plans to become the latest U.S. company to shift its legal address out of the country by merging with a foreign company. Burger King has announced plans to buy Tim Hortons, the Canadian coffee-and-doughnut chain.

Burger King's operations will stay in Miami. But the corporate headquarters of the new company will be in Canada. The transaction is called a corporate inversion, a maneuver that is becoming popular among companies looking to lower their tax bills.

Burger King stressed that the deal is being driven by the international growth possibilities of Tim Hortons, not a desire to take advantage of Canada's lower tax rates.

Still, at least one senator is urging fast-food patrons to take their business elsewhere. Things to know about corporate inversions:

An inversion happens when a U.S. corporation and a foreign company merge, with the new parent company based in the foreign country. For tax purposes, the U.S. company becomes foreign-owned, even if all the executives and operations stay in the U.S.

The U.S. has the highest corporate income tax rate in the industrialized world, at 35 percent. The U.S. is also the only developed country that taxes corporate profits earned abroad. Foreign profits are subject to U.S. taxes once they are brought to the U.S., though corporations can deduct any foreign taxes paid.

Inverted corporations must still pay U.S. taxes on the profits they earn in the U.S. However, they can lower their U.S. tax bills through a maneuver called “earnings stripping.”Here is how it works: The new foreign parent company “lends” money to the U.S. firm, which must pay it back. The U.S. firm then deducts the interest payments it makes to the parent company, reducing its taxable profits — “stripping” them from its balance sheet.

Many U.S.-based corporations are hoarding money overseas, either to invest abroad or to shield it from U.S. taxes. Experts say the total amount could exceed $2 trillion.If a foreign subsidiary sends profits directly to a U.S. corporation, the U.S. firm must pay taxes on it. However, if those profits are funneled through a foreign parent company that was formed through an inversion, the money can be invested in the U.S. without paying U.S. taxes.The technique is called “hopscotching” because the money — at least on paper — bounces from country to country while avoiding U.S. taxes.

Nearly 50 U.S. companies have inverted in the past decade, and more are considering it, according to the nonpartisan Congressional Research Service.

Key Republicans say the only way to adequately address inversions is to overhaul the tax code, making it more attractive for businesses to locate in the U.S.“Anything short of that and you're not going to be able to do it,” said Sen. Orrin Hatch of Utah, the top Republican on the Senate Finance Committee.Hatch and other Republicans say they could support limited efforts to fight earnings stripping, which many see as nothing more than a tax dodge.But in general, Republicans said they don't like the idea of punishing corporations for trying to lower their tax bills.

In 2004, Congress tried to curb inversions by saying U.S. companies couldn't escape U.S. taxes by simply reincorporating abroad, with the same shareholders and executives running the new company. Instead, Congress passed a law saying that in order to become a foreign-owned corporation, U.S. companies must merge with a foreign partner, even if the foreign partner is much smaller.

The Treasury Department says it is “reviewing a broad range of authorities for possible administrative actions that could limit the ability of companies to engage in inversions, as well as approaches that could meaningfully reduce the tax benefits after inversions take place.”Experts are divided over how much Treasury can do without action by Congress.