Qualified Intermediary (QI) US-Tax

General information on the taxation of US securities

The US tax was created in its current form in 2001 in order to facilitate the identification of US persons who make securities investments abroad and to prevent the abuse of double taxation agreements (DTA) for non-resident taxpayers.

The US tax is

• the withholding tax (30%) on US securities (issuer country USA) for non-resident aliens,
• the penalty tax (backup withholding tax, 24%) on all securities for undisclosed US persons with a US connection, and
• 0% for fully documented/disclosed US persons.

General information on the double taxation agreement

Foreign countries generally have domestic regulations that stipulate the taxation of dividend earnings (comparable to the Austrian capital gains tax [KESt] on dividends). This tax is generally – as is also the case in Austria – withheld directly by the foreign company in the course of the distribution (“deducted at source”). The foreign company does not distinguish between domestic and foreign investors for the distribution. As a result, the source country initially withholds taxes in accordance with its regulations and then Austria does as well, resulting in the “theoretical” double taxation of dividend distributions. 

For this reason, there are international agreements – so-called double taxation agreements (DTA) – that define regulations aimed at preventing such situations. One method is the so-called imputation method. According to this method, the source country (domicile of the distributing company) only has a taxation right limited to a certain percentage (typically 15% for dividends); the country of domicile (country of residence of the customer) must take this share, which is generally referred to as the treaty rate, into account as “already paid” in its tax assessment.

A list of the countries with which the USA has signed a double taxation agreement can be found under “Links”.

What is a Qualified Intermediary (QI)?

Dividend and interest payments by US companies are subject to US tax regulations. Banks with QI1 status (Qualified Intermediary with full withholding and reporting obligation) receive a credit for taxable US securities from their depositaries without tax withholding.

As a QI1, UniCredit Bank Austria AG takes on full responsibility for the correct payment of taxes to the US Internal Revenue Service (IRS) on your behalf. 

How do I benefit from this as a customer of UniCredit Bank Austria AG?

The DTA-compliant relief at source is handled directly by Bank Austria AG. This means that we are authorised to directly apply the discounted US tax rate on the basis of the relevant double taxation agreements when the required documentation has been submitted. In this way, we save you from having to go through the refund process directly with the IRS. 

However, it is only possible to claim benefits from double taxation agreements if your country of tax residence has concluded a double taxation agreement with the USA.

In addition, as a QI we can report collectively on an anonymous basis by earnings type and tax rate and thus do not have to disclose all customers subject to taxation to the IRS.

What forms do I have to submit to the bank to be fully documented under QI?

The following customer groups must submit a form so that their status can be identified and a discounted tax rate in accordance with a DTA can be guaranteed: 

Independent of the listed documents for the identification of the QI status, natural persons must also submit a copy of a valid identity document.

What do I have to keep in mind when filling out the forms?

For retail customers, a W-8BEN with DTA must be submitted in order to claim benefits from the DTA. Part II of the form must be filled out for this purpose. The only case in which the form is not required to be submitted is when the tax residence can be unequivocally determined based on the customer data.

For corporate customers, a W-8BEN-E with DTA must be submitted to the bank in order to claim benefits from the DTA. In this case, the chapter 3 status must be filled out in Line 4 and in Part III.

Both forms must be renewed every three years after the end of the year in which they are signed. Otherwise, all benefits from the utilisation of the DTA will lapse. 

The tax rate for customers who have not been properly documented and customers with a tax domicile that does not have a DTA with the USA is standardised at 30% (on interest and dividends). A punitive tax rate of 24% US tax is charged for undocumented US persons.