Is Your Organisation Compliant With US Tax Requirements?

US tax requirements require you to take a number of key actions to better ensure that you are compliant. Have a look at our other checklists on qualified intermediaries and FATCA and CRS obligations. Or, read on for help with determining how compliant you are with other key US tax requirements.

1. PFIC reports

   Is one of your entities a passive entity with US investors?

   Luxembourg entities with US investors may fall under the so-called PFIC Reporting Regime. With regards to the US taxation system, a foreign corporation is treated as a passive foreign investment company (PFIC) if 75% or more of its gross income is passive income (income test), or if at least 50% of the average percentage of its assets produce passive income (asset test).

2. Tax return or reclaim

   Are you confident that the correct amount of US withholding taxes was paid on your past US investments?

   A US tax return is only to be filed by a non-US corporation (on Form 1120-F) or by a non-US individual (on Form 1040NR), if, inter alia, the corporation/individual was engaged in a trade or business in the United States (reporting its effectively connected income or loss); or if the corporation/individual is making a claim for the refund of an overpayment of withholding tax (on US source income). In order to file a tax return or reclaim, a US Tax Identification Number should be requested (via Form SS4).

3. K-1 statements

   Is one of your entities a partnership engaged in a trade or business in the US and do you receive K-1 statements from your counterparty or investments?

   Organisations that are not subject to income taxes at the pass-through entity level are obliged to report their partners' or beneficiaries' incomes, expenses, gains, and/or losses using the form Schedule K-1. This provides the partner/beneficiary with the necessary information to file a US tax return.

4. 871(m)

   Have you made an assessment as to whether your organisation is affected by section 871(m)?

   Section 871(m) of the US IR code treats...