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A withholding agent must withhold 30% of any payment of an amount subject to withholding made to a payee that is a foreign person unless it can associate the payment with documentation upon which it can rely to treat the payment as made to a beneficial owner that is: (1) a U.S. person, or (2) a foreign person entitled to a reduced rate of withholding (e.g., Form W-9,Form W-8, or other appropriate documentation).
Further comment from the IRS:
However, a withholding agent making a payment to a foreign person need not withhold if the foreign person assumes responsibility for withholding on the payment as a qualified intermediary, U.S. branch of a foreign person, a withholding foreign partnership, or an authorized foreign agent.
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