Glossary - Withholding Tax
A 30% withholding tax applies under FATCA on ‘withholdable payments’ in respect of financial institutions that do not comply with the FATCA requirements and/or customers who do not provide the requisite FATCA documentation.
The term ‘withholdable payment’ means:
- fixed or determinable, annual or periodical (FDAP) income, if such payment is from sources within the US – this will include any payment of interest and dividends (this will apply from 1 July 2014)
- any gross proceeds from the sale or other disposition of any property of a type which can produce interest or dividends from sources within the US (this will apply from 1 January 2017).
Various exceptions apply, including for income connected with a US business.