You know what’s better than earning portfolio interest? Nothing. OK, that may be an overstatement. But for non-U.S. lenders looking to earn a return on their U.S.-based investments, with respect to paying U.S. taxes, that’s not much of an overstatement.
I. Investing in U.S. Real Property 投资美国房地产
Oftentimes, non-U.S. investors look to benefit from the historical strength and stability of the U.S. economy. And, in light of the recent decline in the U.S. real estate industry, many non-U.S. investors are looking to take advantage of property values which may still be at historic lows. However, some of these investors are hesitant to acquire a U.S. real property interest for a couple of reasons.
First, some of these non-U.S. investors simply do not want to pay U.S. taxes on their U.S.-source income, whether such income arises from the rental or disposition of a U.S. real property interest. For example, if the non-U.S. investor’s rental activities rise to the level of being engaged in the conduct of a U.S. trade or business, by election or otherwise, then the net rental income received would be subject to U.S. tax the same as if the non- U.S. investor were a U.S. taxpayer. Alternatively, if the non-U.S. investor’s activities do not rise to the level of being engaged in the conduct of a U.S. trade or business, then the gross rental income received would be subject to a 30% tax. And, to ensure the U.S. tax is collected, the tenant is required to withhold such tax from each rental payment. Regardless of whether the property is ever rented, gain from its sale would be subject to U.S. tax. And, to ensure the U.S. tax is collected, the buyer is required to withhold 10% of the gross amount realized from the sale.
首先，有些非美国投资人根本不想为美国境内的收入缴纳税款，无论这些收入是来自房地产租赁 还是买卖。举个例子，如果非美国投资者的租赁行为已经上升到美国境内贸易或商业的层次，不管是如何选择，这些非美国投资者都需要像美国纳税人一样为他们的净租金收入缴纳美国税款。 在另一种情况下，如果非美国投资者的租赁行为并没有上升到美国境内贸易或商业的层次，他们也必须缴纳占总租金收入30%的税款。为了确保该税款的如数缴纳，承租人需要在每个月的租金中预扣该税款。无论房产是否曾出租，出售房产的所得收益均需缴纳美国税款。为了确保该税款的收缴，购房者需要从收益中预扣占售房总金额10%的款项。
Another reason why some non-U.S. investors may be hesitant to acquire a U.S. real property interest is because they simply do not want to file anything with the IRS. Even with the benefit of foreign tax credits and reduced tax rates available pursuant to an applicable income tax treaty, some non-U.S. investors nevertheless find it undesirable to apply for a U.S. tax identification number and/or file a non-resident income tax return or information return.
For those non-U.S. investors looking to participate in the U.S. economy, but who find the applicable tax rules associated with acquiring a U.S. real property interest to be burdensome, lending to a U.S. borrower may be a viable alternative.
II. Lending to a U.S. Borrower 向美国借方贷款
Under the right circumstances lending to a U.S. borrower may address almost all of the non-U.S. investor’s concerns mentioned above. The general rule is that, like rental income discussed above, U.S.-sourced interest income received by a non-U.S. lender is subject to a 30% tax. However, an exception to this general rule provides that U.S.-sourced interest income which qualifies under the portfolio interest exemption is not subject to this tax. Additionally, the non-U.S. lender does not have to file U.S. tax returns respecting such income. And these “benefits” arise without regard to any U.S. income tax treaty. Furthermore, the loan may be secured by a U.S. real property interest, allowing the non-U.S. lender to at least indirectly participate in the U.S. real estate market (e.g., if the non-U.S. person believes that the real estate value will appreciate over time, then any such appreciation will add to the security of the loan).
As you could imagine, the portfolio interest exemption is not available to every non-U.S. lender. And potential lenders would be wise to carefully follow the applicable rules, as failure to do so could have significant adverse tax implications for everyone involved. The following are a handful of rules which, if applicable, would result in the portfolio interest exemption being unavailable.
• Rules Relating to the Transfer of the Loan; Registered Obligations Only. 有关贷款转让的规定;仅限已登记的债务。
The debt instrument must be in registered form. In general, this means that the debt may only be transferred either (i) by the non-U.S. lender surrendering the debt instrument to the U.S. borrower, and having the borrower issue the surrendered debt instrument (or a new one) to the transferee, or (ii) through a book-entry system maintained by the borrower. If the loan is transferable in any other way (e.g., directly from one non-U.S. lender to another), then the interest payable pursuant to the loan will not qualify as portfolio interest and, in such a case, U.S. tax would apply.
有关债务票据必须是实名登记的。一般来说，这意味 着该债务只能在这些情况下转让:(i)非美国贷方将债务票据交给美国借方，且要求借方出具被转移的债务票据(或新的债务票据)给受让人。或(ii)通过借方持有的簿记系统进行转让。如果贷款可以以其他形式转移(例:直接从一个非美国借方转给另一个非美国借方 )，那么该贷款产生的利息将不被计入投资组合收益。在这种情况下，此款项应受美国税法 约束。
• Rules Relating to the Interest Payable; No Contingent Interest. 有关应付利息的规定;非不确定利息。
If the loan provides that any interest payable to the non-U.S. lender is determined by reference to, for example, cash flow, income, fluctuations in property value, or anything similar, then any such interest payable pursuant to the loan will not qualify as portfolio interest and, in such a case, U.S. tax would apply to such interest.
• Rules Relating to the Non-U.S. Lender. There are several rules applicable to the non-U.S. lender. 有关非美国贷方的规定。以下几条规定适用于美国贷方。
First, non-U.S. lenders who are related to the U.S. borrower cannot benefit from the portfolio interest exemption. In general, interest payments made to a non-U.S. lender who owns, directly or indirectly, 10% or more of the borrower do not qualify as portfolio interest. The 10% ownership test varies depending on whether the lender is a partnership, in which case the test is applied at the partner, as opposed to the partnership, level. Additionally, there are complex attribution rules to determine a non-U.S. lender’s relationship with the U.S. borrower.
Second, the non-U.S. lender cannot be a bank.
Third, the non-U.S. lender cannot be a controlled foreign corporation (“CFC”). A CFC is generally defined as any foreign corporation in which U.S. shareholders (each of whom owns 10% or more of the foreign corporation) own more than 50%.
第三，非美国贷方不可为美国股东控股的境外公司(以下简称为 CFC)。CFC 是50%以上股份由美国股东持有(每位股东应持有 10%或以上股份)的境外公司。
Fourth, the non-U.S. lender cannot be engaged in the conduct of a U.S. trade or business relating to the loan.
And finally, the non-U.S. lender must provide the U.S. borrower (as opposed to file with the IRS) an applicable IRS Form W-8 certifying, under penalty of perjury, that among others the non-U.S. lender is not a U.S. person.
最后，非美国贷方须向美国借方(参考美国国家税务局登记信息)提供适用的 W-8 表格， 在伪证刑罚法下，证明其非美国人身份。
In summary, as a general matter, if (i) a non-U.S. lender (which is unrelated to the U.S. borrower, is not a bank, is not a CFC, and is not engaged in the conduct of a U.S. trade or business), (ii) lends money to a U.S. borrower pursuant to (iii) a registered debt instrument, (iv) which pays a fixed rate of interest, and (v) the non-U.S. lender provides adequate documentation as to its non-U.S. status, then the interest payable pursuant to the loan should qualify for the portfolio interest exemption and, in such a case, no U.S. tax would arise with respect to such interest. Assuming the arrangement otherwise makes good financial sense, non- U.S. persons looking to participate, in one form or another, in the U.S. economy should consider lending as an alternative to acquiring a U.S. real estate interest.
As with much of international tax planning, the complexities relating to portfolio interest provide planning opportunities for well advised investors. With careful planning and structuring, non-U.S. investors looking to develop a long-term portfolio of U.S. real estate-related investments can use the portfolio interest exemption to increase their overall after U.S.-tax rate of return. And, in certain carefully structured transactions, the non-U.S. lender may also have the opportunity to participate in the equity appreciation of the underlying real estate.
Snell & Wilmer LLP – William A. Kastin and Mark A. Ziemba