Publication 515 |
2001 Tax Year |
Foreign Governments & Certain Other Foreign Organizations
Investment income earned by a foreign government is not included in the gross income of the foreign government and is not subject to U.S.
withholding tax. Investment income means income from investments in the United States in stocks, bonds, or other domestic securities, financial
instruments held in the execution of governmental financial or monetary policy, and interest on money deposited by a foreign government in banks in
the United States. A foreign government must provide a Form W-8EXP or, in the case of a payment made outside the United States to an offshore
account, documentary evidence to obtain this exemption. Investment income that is paid to a foreign government is subject to reporting on Form
1042-S.
Income received by a foreign government from the conduct of a commercial activity or from sources other than those stated above, is subject to NRA
withholding. In addition, income received from a controlled commercial entity (including gain from the disposition of any interest in a controlled
commercial entity) and income received by a controlled commercial entity is subject to NRA withholding.
A government of a U.S. possession is exempt from U.S. tax on all U.S. source income. This income is not subject to NRA withholding. These
governments should use Form W-8EXP to get this exemption.
International organizations are exempt from U.S. tax on all U.S. source income. This income is not subject to NRA withholding. International
organizations are not required to provide a Form W-8 or documentary evidence to receive the exemption if the name of the payee is one that is
designated as an international organization by executive order.
A foreign organization that is a tax exempt organization under section 501(c) of the Internal Revenue Code is not subject to a withholding tax on
amounts that are not income includible under section 512 of the Internal Revenue Code as unrelated business taxable income. However, if a foreign
organization is a foreign private foundation, it is subject to a 4% withholding tax on all U.S. source investment income. For a foreign tax-exempt
organization to claim an exemption from withholding because of its tax exempt status under section 501(c), or to claim withholding at a 4% rate, it
must provide you with a Form W-8EXP. However, if a foreign organization is claiming an exemption from withholding under an income tax treaty, or
the income is unrelated business taxable income, the organization must provide a Form W-8BEN or Form W-8ECI. Income paid to foreign
tax-exempt organizations are subject to reporting on Form 1042-S.
Previous| First | Next
Publication Index | IRS-Forms Main | Home
|