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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4199
Experience:  FCCA FCMA CGMA ACIS
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What is 'residential tax certificate' and to go about applyi

Customer Question

What is 'residential tax certificate' and to go about applying for one? We do a lot of business with the US and they keep asking for one. Can you please advise?

Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Here is the Internal Revenue Service advice on this matter: 'Form 8802, Application for United States Residency CertificationUse this form to request Form 6166, a letter of U.S. residency certification for purposes of claiming benefits under an income tax treaty or VAT exemption. You cannot use Form 6166 to substantiate that U.S. taxes were paid for purposes of claiming a foreign tax credit.' Under the Double Taxation Treaty between the UK and the USA (and indeed some individual States as well) the same income stream cannot be taxed in both jurisdictions. This is achieved by means of tax credits, any tax paid in one country being allowed as a tax credit against liabilities in another. The Treaty does not protect you from differences in rates of taxation. I do hope that my reply has been of assistance.
Customer: replied 2 years ago.

Hi

I thought the form is to confirm our UK residency, they form you've mentioned is for US residency...

What am I missing?

Expert:  bigduckontax replied 2 years ago.
Well you did say 'they' keep asking for one; who are 'they?'
The form is an US IRS form and should shut everyone in the States up!
Customer: replied 2 years ago.

Hi and thank you

By they I mean our US clients. We are based in the UK only. We havent got an address in the US - dont we need one in order to apply for residency? Isnt there a UK residency form?

appreciated

Expert:  bigduckontax replied 2 years ago.
No there isn't, sorry! You will have to get the IRS to confirm your status. It must happen every day with international trading.
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Customer: replied 2 years ago.

Oh I see so although we are UK registered, so in order to trade with US and do take advantage of thte dual taxation we need to register for US residency? is that right? I'll start filling in the form and hopefully it will make more sense while doing it...

thank you

Expert:  bigduckontax replied 2 years ago.
No, not at all. You can trade with the US no problem without a certificate, but your US customers may want its re-assurance. It is not required to take advantage of the Double Taxation Treaty
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.