2026-03-04
Today we published a chart of PLR 202607002.
For decades, it has been an open question whether the IRS would challenge a treaty-reduced branch profits tax rate for a foreign corporation operating through a disregarded U.S. LLC where the treaty contains a fiscally transparent clause. In PLR 202607002, the IRS allows a Netherlands corporation, operating partly through a disregarded U.S. LLC, to qualify for a reduced branch profits tax rate under the Netherlands-U.S. Income Tax Treaty, even though the treaty contains a fiscally transparent clause. The PLR held that the branch profits tax dividend equivalent amount was not “derived through” the U.S. LLC, and therefore the fiscally transparent clause in the treaty was not applicable.
Tags: 864 Engaged in U.S. Trade or Business (ETOB), 884 Branch Profits Tax, 894 Limitation on Benefits, 894 Treaties
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