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Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
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Experience:  Nearly 30 years of varied tax industry exp. Tax Biz owner
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Hi - Im a Dutch Citizen employed by a Dutch company and get

Customer Question

Hi - I'm a Dutch Citizen employed by a Dutch company and get paid by the dutch comapny. I pay taxes in the Netherlands. I spend about 25% of my time during multiple visit in the U.S. working at for our U.S. subsidiary in California. I visit the U.S. under the visa bussiness waiver program. I'm not a U.S. citizen, have no green card nor work permit and have no residence here. I also do not get paid by our U.S. entity.
I friend of mine brought up that I still have to file a tax return here because I am "providing services in the U.S."

Your thoughts are appreciated.

Guido
Submitted: 1 year ago.
Category: Tax
Expert:  Tax.appeal.168 replied 1 year ago.
Welcome. THANK YOU for choosing Just Answer. My name is XXXXX XXXXX my goal is to help make YOUR life, a little...LESS taxing.

Hello and thank you for requesting my assistance. As you are working at the U.S. subsidiary in the U.S., you care considered as being engaged in a trade or business, and therefore what your friend advised you of is correct. SEE BELOW:

Who Must File

If you are any of the following, you must file a return:

  • A nonresident alien individual engaged or considered to be engaged in a trade or business in the United States during the year. You must file even if:
    • Your income did not come from a trade or business conducted in the United States,
    • You have no income from U.S. sources, or
    • Your income is exempt from income tax.
  • However, if your only U.S. source income is wages in an amount less than the personal exemption amount (see Publication 501), you are not required to file.
  • A nonresident alien individual not engaged in a trade or business in the United States with U.S. income on which the tax liability was not satisfied by the withholding of tax at the source.
  • A representative or agent responsible for filing the return of an individual described in (1) or (2),
  • A fiduciary for a nonresident alien estate or trust, or
  • A resident or domestic fiduciary, or other person, charged with the care of the person or property of a nonresident individual may be required to file an income tax return for that individual and pay the tax (Refer to Treas. Reg. 1.6012-3(b)).

REFERENCE SOURCE:

 

http://www.irs.gov/Individuals/International-Taxpayers/Taxation-of-Nonresident-Aliens

 

-----------------------------------------

 

"Trade or Business" Defined

The term trade or business generally includes any activity carried on for the production of income from selling goods or performing services. It is not limited to integrated aggregates of assets, activities, and goodwill that comprise businesses for purposes of certain other provisions of the Internal Revenue Code. Activities of producing or distributing goods or performing services from which gross income is derived do not lose their identity as trades or businesses merely because they are carried on within a larger framework of other activities that may, or may not, be related to the organization's exempt purposes.

 

REFERENCE SOURCE:

 

http://www.irs.gov/Charities-&-Non-Profits/Trade-or-Business--Defined

 

Please let me know if I can be of further assistance to you regarding this matter.

 

Thank you again for using JUST ANSWER.

Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 2534
Experience: Nearly 30 years of varied tax industry exp. Tax Biz owner
Tax.appeal.168 and 4 other Tax Specialists are ready to help you
Customer: replied 1 year ago.

That is excellent information. However learned that there is a Tax Treaty between the Netherlands and the U.S. dated in 1993.


Could it be that under this treaty I'm exempt from filing a tax return?

Expert:  Tax.appeal.168 replied 1 year ago.
Hello again,

You are correct that there is a tax treaty between the U.S, and the Netherlands. The treaty does not exempt you from having to file a return, however, it exempts a foreign person from being double taxed and also provides for other provisions.

Link to full treaty:

http://www.irs.gov/pub/irs-trty/nether.pdf

I am thinking that there is a Form W8...I don't think it is the W8-Ben, but another one that you may be able to complete in order to not have to file a return. Please allow me a few minutes to research this matter for you. I will get bavk with you soon. Thank you for your patience.
Expert:  Tax.appeal.168 replied 1 year ago.
Thank you for your patience. Based on the following, even though you are not paid by a U.S. company, the following applies;

Personal services income

Compensation for labor or personal services is generally sourced to the place-of performance. Thus, compensation for labor or personal services performed in the United States generally is treated as U.S.-source income, subject to an exception for amounts that meet certain de minimis criteria (this does not apply to you). Compensation for services performed both within and without the United States is allocated between U.S. and foreign source.

REFERENCE SOURCE:

https://www.jct.gov/publications.html?func=startdown&id=3799

You will need to download it and refer to Page 13

--------------------------------------------------

You can also refer to the following IRS document for more detailed information relating to ...Source of income.

http://www.irs.gov/Individuals/International-Taxpayers/Nonresident-Aliens---Source-of-Income

Based on the baove information, you will need to complete a Form W8-ECI and give it to the U.S. subsidiary company.

Link to Form W8-ECI/Instructions:


http://www.irs.gov/pub/irs-pdf/fw8eci.pdf
http://www.irs.gov/pub/irs-pdf/iw8eci.pdf

Let me know if this clarifies matters for you.

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