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US Royalty Double Taxation / Tax Credits

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Hi all,

I've a client who has several years worth of form 1042-s with 30% tax being withheld on Royalty income (Income Code 12). The client was unaware of sending a W8-BEN initially.

Is there anyway to claim this back, I had originally thought it was a simple matter of reclaiming via foreign income pages on the tax return but I can't find any answers via HMRC as to the tax treaty with US royalty payments, and if there is a process for claims back to 2017?

Not sure if anyone here can help but I'd be ever grateful for any pointers.

Thanks.

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By Matrix
07th May 2020 13:54

Have you checked the Royalty article in the UK/US tax treaty?

It looks as if the royalty income is only taxable in the UK which means there is no foreign tax credit and the only way to recover the tax withheld would be to claim a repayment from the IRS. Are there any notes with the tax certificate about this or have you checked on the IRS website?

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By Makkusu
08th May 2020 19:14

Thanks, a little more research has led me to a form 1040-NR-EZ to be filed with the IRS potentially.

Do you (or anyone else) happen to know of any UK firms that deal with completing these?

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