Interactive Brokers - Corporation or Disregarded Entity

[RedRocket]

Hello all,

I'm filling out an application for Interactive Brokers and there are 2 tax questions that I'm unsure about.
NB The company in question is registered in St. Lucia and the owner is from the Caribbean. There are no ties to the USA at all.

Question 1) The US Internal Revenue Service requires that we obtain certain certifications as to the status of NAME OF COMPANY for US income tax purposes. This may affect the tax withholding rate on US income and help us identify all persons from who we must receive certifications. Answer the following questions to assist with this certification.

Identify the manner in which NAME OF COMPANY is treated for US income tax purposes.
A) Corporation
B) Disregarded Entity

Question 2)
Is NAME OF COMPANY a Hybrid Entity claiming the benefits of a tax treaty with the United States?

Note: Hybrid entity status is a special US tax status that does not apply to most foreign entities. Consult a tax adviser if you have questions about this status.
A) No
B) Yes (not common)

Thanks in advance for any assistance.

 

[troubled soul]

The answer to the question 1...... is A) Corporation
The answer to the question 2 is B) Yes (not common)

 

[OffshorePhantom]

The answer for question 1 is indeed A, since it is a Corporation like it has been suggested.

The answer for question 2 should be No since there is no tax treaty between USA and St. Lucia (United States - Corporate - Withholding taxes) so you cannot claim any tax benefits allowed be the existence of a possible tax treaty.

That is also why it highlights that the most common answer is no.

 

[RedRocket]

Thanks for the answers.

@OffshorePhantom I agree with your answer for question 2. St Lucia does not have a tax treaty with the USA.

Thanks for all the feedback.

 

[Mike Williams]

Question to the author of the post - does this not mean that the corporation is going to be subject to WHT of 30% on all dividends and interest received?

 

[RedRocket]

I believe the company would be subject to WHT on dividends.
https://www.interactivebrokers.com/en/support/tax-nonus-initial.php

Generally, tax is withheld at a rate of 30% on payments of US source stock dividends and substitute payments in lieu. The rate of withholding may be reduced if there is a tax treaty between your country of tax residence and the US

Thankful capital gains are not taxed.

 

[Mike Williams]

that has been my hold up in doing this - the WHT on Diidends. My tax attorney did also tell me that there is no WTH on capital gains so I was happy with that. Just need to decide if I am ok with the 30% on dividends. Thanks for the feedback

 

[RedRocket]

I expect dividends collected will be small so I'm happy to give 30% on that.
I'm glad the IBKR handles the collection of it so I don't have to file anything with the IRS.

Now just to find the right stocks to invest in