U.S.A: U.S. Tax Reform impacts on withholding tax rates

05.01.2018

Clearstream Banking1 informs customers that on 22 December 2017, the President of the United States signed into Law the “Tax Cuts and Jobs Act of 2017”. The Law reforms the U.S. Tax system and foresees, among others, the following changes:

The backup withholding tax rate is reduced from 28% to 24%;

The withholding tax rate on distributions of effectively connected income by publicly traded partnerships is reduced from 39.6 % to 37%, when paid to foreign individuals and foreign non-corporate entities;

The withholding tax rate on distributions of effectively connected income by publicly traded partnerships is reduced from 35 % to 21%, when paid to foreign corporations;

The withholding tax rate on distributions by Real Estate Investment Trusts (REITs) classified as capital gains is reduced from 35% to 21%, when paid to foreign persons. More information on REITs distributions taxation may be found on our dedicated page “Tax treatment of U.S. REITs and RICs”.

These new withholding tax rates are effective as of 1 January 2018.

Further information

We continue to monitor the information available on the market and will provide more information as it becomes available.

For further information, please contact the Clearstream Banking Tax Help Desk, Clearstream Banking Client Services or your Relationship Officer.

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1. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for Clearstream Banking AG customers using Creation Accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.