Treaty eligibility is not automatic
International Structuring & the United States
Having a treaty with the United States is not the same as being entitled to use it.
GCC business setup specialists
The limitation on benefits clause decides it
US treaties contain detailed limitation on benefits provisions designed to stop entities that are resident in a treaty country but not genuinely connected to it from claiming treaty rates. A holding company inserted in a treaty jurisdiction purely to reduce US withholding will usually fail those tests. Whether your entity qualifies is a specific analysis of ownership, activity and sometimes listing status — not a matter of which country it sits in.
- Treaty eligibility treated as a question, not an assumption
- Permanent establishment risk identified before you operate
- Property and share disposal withholding flagged early
20+
Mainland, free zone and offshore jurisdictions we file in — so the recommendation is based on your activity, not on which authority we happen to be registered with.
7,000+
Companies successfully established.
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Settle these first
The questions that decide the structure
Each is a specific test, not a general principle.
| Question | Why it decides the structure |
|---|---|
| Does the entity satisfy limitation on benefits? | Treaty rates depend on it. |
| Will activity create a permanent establishment? | That changes the basis of taxation. |
| What payments will leave the US? | Withholding applies to many of them. |
| Will US real property be held? | Disposal withholding applies. |
| Who are the ultimate owners? | Ownership feeds the treaty tests. |
| Is certification in place? | Withholding agents require it. |
Treaty provisions, limitation on benefits tests, permanent establishment standards and withholding rules are set by federal law and treaty and change. These require US tax advice, with which we co-ordinate. We handle US formation and compliance set-up and co-ordinate with a US tax adviser where advice is needed. We do not give US federal or state tax advice.
How it works
Working through it properly
Test the treaty before relying on it.
01
Map the facts
Ownership, where activity will occur, what payments will cross the border and whether US property or shares are involved.
02
Test eligibility
Treaty qualification and permanent establishment exposure assessed with a US tax adviser rather than assumed from the treaty’s existence.
03
Implement and certify
Entities formed where agreed, withholding certifications completed and intercompany arrangements documented.
- Full ownership chain to ultimate owners
- Where each entity is tax resident
- Whether any entity is publicly listed
- Group structure chart
- Where US activity will take place
- Whether US personnel or premises are involved
- Payments expected to leave the US
- Whether US real property will be acquired
- Whether US shares will be held or sold
- Existing withholding certifications
- Advice already received in other countries
- Timeline
Scope
What is included, and what is not
Stated plainly, so nothing is added once the engagement starts.
Included in the service fee
- Fact-gathering and options paper
- Co-ordination with a US tax adviser on treaty eligibility
- Permanent establishment exposure flagged
- Withholding certification preparation
- Entity formation and registrations where agreed
- Intercompany agreement co-ordination
- Documented basis for the structure
- Co-ordination with advisers in other countries
Not included, quoted separately
- US federal and state tax advice
- Treaty eligibility opinions
- Permanent establishment determinations
- Transfer pricing studies
- Property disposal withholding computations
- Formation of entities outside the US
- Filings in other jurisdictions
- Securities advice
Verify independently
Relevant US authorities
We file directly with these bodies on your behalf.
Internal Revenue ServiceSecretary of State of the state of formationState departments of revenueUnited States Patent and Trademark OfficeCounty recorder and clerk officesFinancial institutions and their compliance functions
Questions
International structuring and the US — FAQs
My country has a treaty with the US — can I use it?
Not automatically. Limitation on benefits provisions test whether the entity is genuinely connected to that country, and inserted holding companies frequently fail them.
What is a permanent establishment?
A level of US presence that changes how you are taxed. Personnel, premises and dependent agents can all create one, sometimes unintentionally.
What happens if I sell US real property?
Withholding applies on the disposal, and it can also apply to shares in entities holding US real property. It should be planned for before acquisition.
What certification do withholding agents need?
Formal certification of your status and any treaty claim. Without it the full statutory withholding rate generally applies.
Do you give US tax advice?
No. We handle the US formation and compliance work and co-ordinate with a US tax adviser on these questions.
Go deeper
More United States services
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