News: Obtaining ITIN in the USA

Non-resident natural persons can obtain ITIN in the following cases:

1. Non-resident of the United States, to whom it is necessary to submit application for reduction in the taxable base for non-resident profits in accordance with the International Agreements on Avoidance of Double Taxation (Regulations section 1.1441-1(e)(4)(vii)(A)). Also Pub. 515, Withholding of Tax on Non-resident Aliens and Foreign Entities).
2. Non-resident of the United States, who does not fall under conditions of obtaining social security number (not an employed person in the USA), who is required to file a tax return or files a tax return to receive a refund of tax payments.
3. Non-resident of the United States, who does not meet the conditions of obtaining social security number (not a hired person in the USA), who submits a tax return jointly with a spouse with US citizenship or non-resident of the United States in the event of gaining income related to direct or indirect sources of profits in the USA.
4. Non-resident of the United States, who resides in the territory of the United States less than during the term required to obtain a residence in the United States, that has income or profits in the United States and is not eligible for social security number (not an employed person in the US (Pub. 519, U.S. Tax Guide for Aliens).
5. The spouse of non-resident of the United States, who is not within the scope of the US tax base and is not eligible for social security number (not a hired person in the US).
6. Non-resident of the USA who is dependent on the US resident, but who does not qualify for social security number (not an employed person in the US (see Pub 501, Exemptions, Standard Deduction, and Filing Information, and Pub. 519.)
7. Non-resident of the United States, who is a student, professor, or scientist who is required to file a tax return, but does not qualify for social security number (not an employed person in the US).
8. Non-resident of the USA who engages in trade or business in the United States during the year if the source of income in the United States is wages or remuneration in the amount greater than the minimum specified for married persons, and who file a separate declaration from the spouse - $ 4000 or if the declarant is not married and has not reached 65 years - $ 10,300.
9. Non-resident of the USA who does not engage in trade or business in the US, but has income in the United States, according to which the tax liability was not satisfied by means of charging withholding tax.

It is worth taking into account that non-resident is required to indicate the profit that is directly related to trade or business in the United States in the tax return.

Income that is directly related to trade or business in the US is the following:

• In the case of owning and management of business in the United States, which is engaged in selling services and / or goods, such activities are recognized as trade or business in the United States.

• Certain types of income from foreign source can be considered as effectively related to trade or business in the United States. Publication 519, U.S. Tax Guide for Aliens. (Part of the dividends received from the foreign company is income from the source in the US, if 25% or more of the total gross income for the 3-year period were actually related to trade or business in the US. If the company was formed and operates less than 3 years, then the data from the last declared period are used for determination in the return).

We propose to consider an example of a situation in which non-resident of the United States is entitled to obtain ITIN on the basis of the above provisions of the legislation.

A client that is non-resident of the United States is a 50% owner of a Cyprus company, which is a 100% shareholder of the US company.

Proceeding from the second exemption, in case of receiving profit as payment of dividends from the Cyprus company, which has received profit from Dividends of the US company, the client can be recognized as the person obliged to file tax return in the United States. In order to do this, 25% or more of the total profits of the Cyprus company should be earnings from the paid dividends of the US company.

Based on the fact that the Client is an affiliated person with the US company (indirect ownership), the Client can enter into an agency agreement with the US Company for the sale of goods and services in the United States remotely. In this case, his profits will fall under the condition of filing mandatory tax return in the United States.

Lawyers from Law & Trust International will help to obtain ITIN in the USA. Our specialists are ready to provide you with all the necessary additional information on this service. Consultations are provided in person or by phone.