Archive for Tax Treaty Map

Tax Treaties And Exempt Income: The U.S.-Czech-Republic Tax Treaty; The U.S.-Romania; The U.S.-Bulgaria Tax Treaty; The U.S.-Italy Tax Treaty; The U.S.-Poland Tax Treaty

Tax Treaties and Exempt Income

Most United States tax treaties provide an exemption for certain categories of employees, including teachers, students, and researchers.[1]

Nonresident alien teachers, students, and trainees who are entitled to treaty exemptions from U.S. tax on part or all of their salary for working in the United States are generally required to file Form 8233 in order to claim the exemption.[2]

A teacher or trainee is an individual, other than a student, who is temporarily in the United States under a “J” or “Q” visa and substantially complies with the requirements of that visa.  A person is considered to have substantially complied with the visa requirements if they have not engaged in activities that are prohibited by U.S. immigration laws and could result in the loss of their visa status.

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What Is FDAP Income?

What Is FDAP Income?

The United States generally taxes nonresident aliens and foreign corporations on their U.S.-source income.  A foreign taxpayer’s U.S.-source income falls into one of two general categories: (i) “fixed or determinable annual or periodical gains, profits, and income” (“FDAP income”) or (ii) income that is “effectively connected” with the conduct of a U.S. trade or business (“ECI”).  In this post, we focus on the taxation of FDAP income.

A non-U.S. person is generally taxed on a gross basis and at a 30-percent rate on U.S.-source FDAP income, which is subject to withholding.  In many cases, however, FDAP income is subject to a reduced rate of tax, or entirely exempt from tax, under the Code or a bilateral income tax treaty.

What is FDAP Income? 

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