When are foundation grants to foreign recipients potentially subject to withholding?
A grant or award from a U.S. foundation is generally subject to 30% withholding if it is paid in connection with the conduct of activities and goes to (1) a nonresident alien; (2) a foreign corporation or (3) a foreign trust. (For certain scholarship payments to foreigners studying in this country on certain specified types of visas, the withholding rate is lowered to 14%.) However, there are three important exceptions, described below, that eliminate the withholding requirement for many grants. In addition, grants or awards to foreign governmental entities are subject to special rules that generally do not require withholding. Furthermore, unlike grants made in connection with activities, grants that are intended to be used exclusively to acquire property are not subject to withholding.
Related Questions
- Does the list of uses, programs, and recipients to which the Foundation (with rare exception) does not make grants apply to the small grants process?
- How can a foundation without foreign offices or resources for site visits make grants to groups around the world and ensure due diligence?
- When are foundation grants to foreign recipients potentially subject to withholding?
