Tax & Accounting Blog

Partners and Details Firming around FATCA

Partners and Details Firming around FATCA

Foreign financial institutions and governments might initially have groaned when the U.S. Congress passed the Foreign Account Tax Compliance Act in March 2010, but it looks like at least some of them are starting to come around. In February, the U.S. Treasury announced it had partnered with five European nations — France, Germany, Italy, … Read More

New Cost Basis Rules May Be Lost on Many

New Cost Basis Rules May Be Lost on Many

With taxpayers in the throes of planning their 2011 income tax returns, now’s a good time to remind filers not to overlook new cost basis reporting rules governing securities sales. In the past, they had the option of specifying which shares they sold when computing their cost basis. But as of 2011, taxpayers’ account custodians … Read More

Treaty Exemptions for Business Profits – Part 5: A Fixed Place of Business

Treaty Exemptions for Business Profits – Part 5: A Fixed Place of Business

In order for an enterprise to have a fixed place of business, the place of business must be a building or physical location. The premises need not be owned or leased by the enterprise nor used exclusively by the enterprise. It is enough that the space is at the constant disposal of the enterprise. For … Read More

Withholding on U.S. Business Income of Foreign Vendors – Part 3: Effectively Connected Income Not Exempt from Withholding

Withholding on U.S. Business Income of Foreign Vendors – Part 3: Effectively Connected Income Not Exempt from Withholding

Non-U.S. individuals may use Form W-8ECI for their Effectively Connected Income (ECI), such as rents from U.S. real property for which the beneficial owner elected ECI treatment on Form 1040NR. Non-U.S. individuals are restricted by the regulations from using Form W-8ECI for their compensation for personal services performed in the U.S. (This restriction is indicated in the … Read More

Withholding on U.S. Business Income of Foreign Vendors – Part 2: Claiming Exemption from Withholding on Effectively Connected Income

Withholding on U.S. Business Income of Foreign Vendors – Part 2: Claiming Exemption from Withholding on Effectively Connected Income

A foreign enterprise that is engaged in a U.S. trade or business during the tax year may request an exemption from NRA withholding on its Effectively Connected Income (ECI) that is identified on line 9 of a valid Form W-8ECI presented to the payer prior to payment (unless an exemption is not available). To be valid, … Read More

Withholding on U.S. Business Income of Foreign Vendors – Part 1

Withholding on U.S. Business Income of Foreign Vendors – Part 1

Foreign vendors being paid by U.S. organizations may include foreign enterprises that are engaged in a U.S. trade or business. Income of a foreign vendor that is effectively connected with the enterprise’s U.S. trade or business is subject to U.S. income tax after allowable deductions at graduated rates. Such effectively connected income (called ECI), when paid by … Read More