WTS US

Inbound Investment Funds and Withholding Foreign Partnership Status

This article addresses the practical difficulties often confronted by inbound funds and offers possible solutions. Section I provides an overview of the general U.S. withholding and reporting requirements. Section II describes some approaches that are often considered by funds to address the U.S. requirements, including hy- brid and blocker arrangements. Section III describes the potential withholding foreign partnership (WFP) solution. The potential benefits of WFP status can be significant, such that close consideration of the WFP rules — including the requirements inherent in WFP status — should be carefully considered.