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Do foreign owned companies owe U.S. federal income tax on income from holdings of U.S. Treasury bonds?

Do foreign (non-US) owned companies owe U.S. federal income tax on income from holdings of U.S. Treasury bonds?

For context, the foreign company has no U.S. citizen or resident ownership (not a CFC or PFIC).

If yes,
- Does the U.S. Treasury withholding some or all of the expected tax?​
- Under what scenario could the foreign company file to recover any withholding tax?​

Answers

Andreas Agas
Title: Chief Risk Officer
Company: Stronghold Group
(Chief Risk Officer, Stronghold Group) |

Just got this from a colleague:

US debt instruments, including Treasuries issued on or after 3/18/2012 , are eligible for the so-called “portfolio interest exemption” if they are in registered form and the foreign owner is not (1) a CFC, (2) a bank, or (3) a 10% or more shareholder of the issuer.

The foreign owner gives the paying agent an IRS Form W-8 BEN.

If the instrument was issued earlier than 3/18/2012, the portfolio interest exemption provides a second way for the holder to claim it, but again, only if the instrument is in registered form.

Since the contemplated company is not a CFC, it doesn’t have to worry withholding should not be an issue as I believe Treasuries are always issued in registered form.

Coupons biss
Title: Designer
Company: Couponsbiss
(Designer, Couponsbiss) |

Agree with Andreas.

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