What is a U.S. Publicly Traded Partnership (PTP) and how are these securities taxed?
A U.S. publicly traded partnership (PTP) is a business organisation owned by two or more co-owners whose shares are regularly traded on an established securities market.
Section 1446(f) of the U.S. Internal Revenue Code imposes new withholding and reporting requirements on sales of a partnership interest. Generally, the securities affected are classified as partnerships for U.S. tax withholding purposes. Such securities include Master Limited Partnerships, Publicly Traded Partnerships, and Exchange Traded Funds.
All non-U.S. tax resident or citizen accounts holding securities that are in the scope of section 1446(f) will be subject to additional withholding requirements.
Current section 1446 regulations already extend to include withholding on partnership distributions. Additional requirements include a new withholding rate on distributions as high as 37%, and a 10% withholding tax on proceeds of sale for partnership securities, regardless of whether a gain or loss has occurred.
Please review Section 1446 regulations with your tax professional to determine whether you will be subject to the new/increased U.S. withholding tax and additional reporting requirements.