What are the tax implications for a Non-US Citizen?
The specific rules of how these accounts are taxed are described in IRS Publication 515 (Withholding of tax on non-resident aliens) and IRS Publication 901 (Tax treaties). The tax treaty is especially important. If the individual’s country of residence has an agreement (tax treaty) with the US government, those rules apply. For example, residents of Germany should not have any tax withheld on interest or capital gains, only for dividend payments. However, if the individual’s country of residence has no agreement with the US, then the individual should complete the 1001 form (exemption form), and no tax will be withheld at all. A Non -US citizen is required to complete a form W-8BEN, which is a certificate of foreign status, at the time of purchasing the shares from his broker.
