You make these determinations based on the documentation and other information (contained in a withholding statement) that is associated with the flow-through entity's Form W-8IMY. For purposes of Chapter 4, you must determine the Chapter 4 status of the owners or beneficiaries of a flow-through entity (subject to the exceptions described above), how much of the payment relates to each owner or beneficiary, and whether withholding under Chapter 4 applies. or foreign persons, how much of the payment relates to each owner or beneficiary, and, if the owner or beneficiary is foreign, whether a reduced rate of Chapter 3 withholding applies. You may also be required to treat the entity as a flow-through entity under the presumption rules.įor purposes of Chapter 3, you must determine whether the owners or beneficiaries of a flow-through entity are U.S. Generally, you treat a payee as a flow-through entity if it provides you with a Form W-8IMY on which it claims such status. If you make a withholdable payment to a flow-through entity that is not one of the types described above, you must treat the partner, beneficiary, or owner (as applicable) of the flow-through entity as the payee for Chapter 4 purposes (similar to the determination of the payee for Chapter 3 purposes) (looking through partners, beneficiaries, and owners that are themselves flow-through entities that are not one of the types described above). An excepted NFFE that is not acting as an agent or intermediary with respect to the payment.
For purposes of Chapter 4, however, a foreign entity that is a flow-through entity is a payee with respect to a payment (other than income effectively connected with the conduct of a U.S. tax purposes, but the payee is claiming treaty benefits, see Fiscally transparent entities claiming treaty benefits, below.Ĭhapter 4 payees. If the Chapter 3 payee is a disregarded entity or flow-through entity for U.S. A foreign simple or foreign grantor trust (other than a withholding foreign trust)
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