galeno wrote: ↑
Tue Oct 16, 2018 1:06 pm
If USA domicled money gets sent to a non-USA domicile does not 30% USA-NRA have to be withheld and given to the USA tax authorities?
It is (of course) complicated.
Chapter 3 US withholding is for tax. That would be 30% or lower treaty rate on dividends, and 0% on interest, capital gains, and principal. Special rates apply to US situated real estate under FIRPTA.
Chapter 4 US withholding is for FATCA
. That would be 30% of dividends and interest, reduced to 0% where the country has a FATCA IGA (intergovernmental agreement) with the US. Planned for next year is an extension
of this to cover "gross sale proceeds" of anything than can produce dividends or interest (and yes, for non-IGA country investors this could easily cut into principal).
If both of the above apply, the total US withholding is 51%. It remains to be seen whether the US really can enforce the upcoming 30% on "gross sale proceeds" of non-IGA country investors without losing a whole heap of inward investment in the process. FATCA passed into law in 2010, and the fact that it is still not fully implemented as of late 2018 reveals much regarding its basic unworkability.
As for the OP's dad... just move the money out of the US now and put it to good use elsewhere. No sense leaving it to rot in the US, as far as I can see. And I certainly would not get fired up about a possible 1.9% APR in US interest if it meant facing all of the hurdles the US puts in place for NRAs. Surely a comparable rate can be had risk-free in pretty much any other country, and without the worry of all the US tax traps set for NRAs.