In 2017, Congress added two new provisions to the Internal Revenue Code targeting non-US investors into US publicly-traded partnerships (PTPs), private equity and alternative investment funds. The substantive statute – §864(c)(8) – sets out a special sourcing rules for interests held by non-US Persons in funds engaged in active businesses in the US, treating the sale or other disposition of such interests by non-US Persons as effectively connected income, making it thus taxable by the IRS. The withholding statute – §1446(f) – sets the terms by which intermediaries involved in the transaction are obliged to levy withholding tax on related payments and, along with the proposed PTP withholding provisions in the Qualified Intermediary Agreement (QI Agreement), determines the operational infrastructure needed for bank compliance.
Millen Tax & Legal offers an array of §864(c)(8) and §1446(f)-related services, including:
Millen Tax & Legal offers an array of §864(c)(8) and §1446(f)-related services, including:
- For custodial banks holding PTPs
- Analysis of PTP withholding and reporting under the QI Agreement
- Operational support in setting up a withholding regime on PTP interests
- Analysis of PTP withholding and reporting under the QI Agreement
- For non-US Persons investing in US PTPs or private equity funds
- Interpretation of the substantive rules for investors and their financial advisors
- Preparation of the documentation necessary for limitations and exemptions
- Calculations of amounts owed
- For fund managers of in-scope PTPs or private equity funds
- Advisory services to fund managers on their residual withholding duties
- Preparation of the documentation necessary for limitations and exemptions
For more information, please refer to the Millen Tax & Legal blogs, publications and presentations
Nominee Reporting under the PTP Withholding Provisions of the Proposed QI AgreementOperational Taxes for Banks Europe (Zürich) |
§1446(f) draft withholding regulations releasedThe Trump tax bill: What it means in Switzerland (Part II) |
A feast for the tax lawyers: The proposed §864(c)(8) regulationsSwiss banks, fund managers and investors: What the §1446(f) proposed regulations demand of each party |
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