Foreign Investment in the U.s.
As a foreign investor, you have the same goal of minimizing taxes from your U.S. investments as do your U.S. counterparts. We know that not only does the U.S. have a special income tax regime that applies to you as a foreign person, but that you also have to contend with income taxes in your home country.
Special U.S. tax rules for foreign investors
Unlike U.S. persons who are subject to U.S. taxation on their worldwide income, foreign investors generally must pay taxes on only two categories of income:
1. Certain types of passive investment income. Gross U.S. source “fixed or determinable annual or periodical” (FDAP) income, including interest, dividends, rents, and annuities, is taxed at a flat 30% rate. There is no allowance for deductions, or reductions in the statutory rate unless an international tax treaty applies.
2. Business income. If your U.S. activities constitute a trade or business, your net “effectively connected income” (ECI) will be taxed at the same graduated tax rates as those which apply to U.S. persons.
Tax advice for foreign investors
The international tax attorneys at Moskowitz, LLP assist countless foreign investors, helping them leverage every available U.S. tax savings opportunity. We will take advantage of international tax treaties to reduce both your U.S. tax and foreign taxes, and assist you in selecting the most appropriate investment vehicle for your investments in the United States, particularly for purchases of U.S. real estate.