- QI's (Qualified Intermediary) are allowed to handle taxation in-house without disclosing their clients to the upstream custodians and using tax treaty benefits for their clients. It means that QIs can choose to receive GROSS dividend payments from their upstream custodian. It is the responsibility of QI to collect W-8 series forms from their clients and do tax withholding.
In some cases, QI may choose to delegate the withholding and tax deposits to their upstream custodian. However, in such a case, an upstream custodian must have an appropriate infrastructure to facilitate such a request. Currently, EXANTE does not have an infrastructure to handle correct withholding for other QIs.
- Non-QIs (Non-Qualified Intermediary) can only benefit from tax treaty agreements ONLY if they disclose their individual clients to QI. Otherwise, the 30% tax rate must be applied to all US sources of FDAP (Fixed, Determinable, Annual, and Periodic) income. The upstream custodian will always withhold Non-QI, and Non-QIs cannot choose to receive GROSS dividend payments.