Any project that includes a non-U.S. sponsor has potential tax withholding implications for your DLC.

Check for non-U.S. tax withholding

A payment from a non-U.S. sponsor to MIT may be subject to tax in the home country of the sponsor. This tax often is referred to as withholding tax. If a tax treaty exists between the country of the sponsor and the U.S., an exemption from withholding tax or a lower withholding tax may exist.

Withholding requirements may affect the level of funding available to your DLC’s project. MIT’s practice is to ask the sponsor to pay for any applicable taxes to ensure that the amount of funding your DLC receives is not reduced. 

Identify potential documentation requirements

In some countries (India, for example), a sponsor can make a payment to MIT only after MIT provides certain documentation to the sponsor along with a copy of Form 6166, which verifies MIT’s tax residency in the U.S. If withholding tax is due on funding from the sponsor, always ask the sponsor to send MIT a copy of the documentation confirming that the withholding tax liability has been properly discharged.

Contact Drew Wheadon or Jodi Kessler if you need assistance with withholding tax compliance.

The Details

Check for non-U.S. tax withholding

A payment from a non-U.S. sponsor to MIT may be subject to tax in the home country of the sponsor. This tax often is referred to as withholding tax. If a tax treaty exists between the country of the sponsor and the U.S., an exemption from withholding tax or a lower withholding tax may exist.

Withholding requirements may affect the level of funding available to your DLC’s project. MIT’s practice is to ask the sponsor to pay for any applicable taxes to ensure that the amount of funding your DLC receives is not reduced. 

Identify potential documentation requirements

In some countries (India, for example), a sponsor can make a payment to MIT only after MIT provides certain documentation to the sponsor along with a copy of Form 6166, which verifies MIT’s tax residency in the U.S. If withholding tax is due on funding from the sponsor, always ask the sponsor to send MIT a copy of the documentation confirming that the withholding tax liability has been properly discharged.

Contact Drew Wheadon or Jodi Kessler if you need assistance with withholding tax compliance.

Did You Know?

VPF has assembled a dedicated team to support your DLC’s global operations. Visit the Global Support page of this website to learn more.
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