On May 7, 2019, the U.S. Treasury Department (Treasury) and the U.S. Internal Revenue Service (IRS) issued proposed regulations with guidance on how to apply withholding tax under U.S. Internal Revenue Code (IRC) Section 1446(f) on a transfer by a non-U.S. person of an interest in a partnership that carries on a trade or business in the U.S. or otherwise realizes income effectively connected with such a trade or business (ECI). These proposed regulations are potentially relevant to any non-U.S. investor in such a partnership.
Partners in publicly traded partnerships (PTPs) would most likely hold their interests through nominees such as brokers and custodians. The proposed regulations would require a tax equal to 10 per cent of the gross proceeds on any transfer of interest in such a PTP by a non-U.S. person to be withheld. Here, a transfer involves a sale, exchange, or other isposition of interest in a partnership. he seller broker that receives the gross roceeds from the transfer and acts on behalf of such a transferor would be required to withhold the tax.
- New Proposed Regulations for Withholding on Transfers of Certain Partnership Interests
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Vice President, Tax, CIBC Mellon
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CIBC Mellon is a Canadian company exclusively focused on the investment servicing needs of Canadian institutional investors and international institutional investors into Canada. Founded in 1996, CIBC Mellon is 50-50 jointly owned by The Bank of New York Mellon (BNY Mellon) and Canadian Imperial Bank of Commerce (CIBC). CIBC Mellon's investment servicing solutions for institutions and corporations are provided in close collaboration with our parent companies, and include custody, multicurrency accounting, fund administration, recordkeeping, pension services, exchange-traded fund services, securities lending services, foreign exchange processing and settlement, and treasury services.
As at September 30, 2022, CIBC Mellon had more than C$2.3 trillion of assets under administration on behalf of banks, pension funds, investment funds, corporations, governments, insurance companies, foreign insurance trusts, foundations and global financial institutions whose clients invest in Canada. CIBC Mellon is part of the BNY Mellon network, which as at September 30, 2022 had US$42.2 trillion in assets under custody and/or administration. CIBC Mellon is a licensed user of the CIBC trade-mark and certain BNY Mellon trade-marks, is the corporate brand of CIBC Mellon Global Securities Services Company and CIBC Mellon Trust Company, and may be used as a generic term to refer to either or both companies.
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