USA Foreign co. holding US T-bonds questions

[alphaSquared]

Do foreign (non-US) owned companies owe U.S. federal income tax on income from holdings of U.S. Treasury bonds?

If yes,

- Does the U.S. Treasury withholding some or all of the expected tax?​

- Under what scenario could the foreign company file to recover any withholding tax?​

 

[alphaSquared]

Just got this from a colleague:

US debt instruments, including Treasuries issued on or after 3/18/2012 , are eligible for the so-called “portfolio interest exemption” if they are in registered form and the foreign owner is not (1) a CFC, (2) a bank, or (3) a 10% or more shareholder of the issuer.

The foreign owner gives the paying agent an IRS Form W-8 BEN.

If the instrument was issued earlier than 3/18/2012, the portfolio interest exemption provides a second way for the holder to claim it, but again, only if the instrument is in registered form.

Since the contemplated company is not a CFC, it doesn’t have to worry withholding should not be an issue as I believe Treasuries are always issued in registered form.