Foreign Charitable Foundations or Entities and the U.S. Qualified Intermediary Rules

Foreign charitable foundations and other charitable entities with non-United States (U.S.) held financial accounts can receive a preferential withholding tax rate under the U.S. qualified intermediary (QI) program, in respect of U.S. securities holdings, should they qualify for this preference based on an equivalency determination by a U.S. admitted attorney. The normal U.S. withholding rate for foreign entities not taking advantage of a tax treaty is 30%.

As explained under the U.S. Tax Code and associated rules for foreign charitable foundations and other charitable entities, if a foreign foundation or entity is considered 'equivalent' to a U.S. recognized charitable entity (defined by the Internal Revenue Code Section 501(c), it may be considered eligible for a tax exemption that in most cases would place it into a 4% withholding tax pool. A thorough review of the foreign foundation's or entity’s structure, articles, statutes and financial statements, along with the audited