If you’re a US-based company earning income from another country, you might need a Tax Residency Certificate (TRC) to claim benefits under a Double Taxation Avoidance Agreement (DTAA). This certificate proves that your business is a tax resident of the United States and helps you avoid paying tax twice on the same income. In this guide, we’ll explain everything you need to know about getting a TRC for a US entity, including the process, documents, and benefits.

What is a Tax Residency Certificate?

A Tax Residency Certificate (TRC) is an official document issued by the Internal Revenue Service (IRS) that confirms a business or individual is a tax resident of the United States. For US entities, this certificate is often required when doing business internationally and looking to claim tax benefits under a Double Taxation Avoidance Agreement (DTAA). The TRC serves as proof to foreign tax authorities that the income earned abroad is eligible for reduced tax rates or exemptions as per the tax treaty between the US and that country.

When Do you Need a Tax Residency Certificate as a US Entity?

As a US entity, you need a Tax Residency Certificate (TRC) when you are receiving income from a foreign country and want to claim tax treaty benefits. Here are some common situations when a TRC is required:

• When you receive royalties, interest, dividends, or service income from a treaty country.
• If you want to reduce or eliminate foreign withholding taxes as allowed under the Double Taxation Avoidance Agreement (DTAA).
• When the foreign tax authority asks for proof that your business is a resident of the United States for tax purposes.
• If you’re involved in cross-border transactions and want to avoid double taxation on the same income.

Why Ebizfiling?

EbizFiling.com is a leading business platform providing comprehensive corporate legal services, including company incorporation, compliance, advisory, and management consultancy, both in India and internationally. The platform offers fast, easy, and affordable ITR filing, TDS Filing, GST return filing, company return filing. You can contact with compliance manager at 09643203209 or email info@ebizfiling.com.

Form 8802 – Application for Tax Residency Certificate as a US Entity

Form 8802 is the official IRS form used by U.S. individuals and entities to apply for a Tax Residency Certificate (Form 6166). This certificate serves as proof that the applicant is a resident of the United States for tax purposes, according to U.S. income tax laws. The form must include details like the taxpayer’s identification number (EIN or SSN), tax year, and the foreign country where treaty benefits will b

Businesses and individuals file Form 8802 when they want to claim benefits under a Double Taxation Avoidance Agreement (DTAA) between the U.S. and another country. These benefits may include reduced withholding tax rates or full exemptions on certain types of income, such as royalties, interest, dividends, or service fees earned abroad. Filing Form 8802 helps avoid being taxed twice on the same income; once in the U.S. and again in the foreign country.

Importance of a Tax Residency Certificate

• It proves that your business is a tax resident of the United States.
• Allows you to claim benefits under tax treaties with other countries.
• It helps avoid paying tax twice on the same income.
• It reduces or eliminates foreign withholding taxes on income.
• Ensures compliance with international tax laws.
• Supports smooth processing of cross-border transactions.
• It builds trust with foreign tax authorities and partners.
• Helps your business save money and improve cash flow.