USA treaties and limitation of benefits

USA treaties and limitation of benefits

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USA dividend WHT is 30% so any overseas investor would always seek to invest from an entity in a treaty resident jurisdiction.  

lf it were resident in a non treaty jurisdiction it could in the first instance invest via a subsidiary that were.  

Assuming that the parent is privately owned, could this work if it invested in the USA through a UK based subsidiary (which had real substance and was not set up to act as a flow through)?   Or would the limitation of benefits clause always prevent the UK company from claiming treaty benefits (due to it having a non treaty resident parent)? 

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By User deleted
15th Aug 2015 09:00

I've read and read the question again and agin. Sorry I can't make anything out of it.

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By Matrix
15th Aug 2015 09:16

If there are strong business reasons for its existence then I don't see why you would need to look at the limitation of benefits clause, what are they? If it is solely set up to obtain treaty benefits then looks like treaty shopping. How would you extract the profits to the offshore owner? The US income would have to be pretty high to justify the UK tax and running costs

(Luxembourg or Neths or Ireland tend to be used more than UK in structuring but you do not provide any facts or whether there would be a genuine presence and would also need to look into the US tax implications - not just withholding - including FATCA.) 

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