May 13, 2025
beinformed: Proposed Section 899 IRC and its deterrent consequences
The bill H.R. 591 proposes the introduction of Sec. 899 of the U.S. Internal Revenue Code, which would impose additional withholding taxes on U.S. income of foreign investors from countries which, from the U.S. perspective, apply extraterritorial or discriminatory taxes. These tax surcharges of up to 20 percentage points would also override double taxation treaties and could, for example, affect German investors in U.S. fund structures. Although certain existing exemptions—such as those for Qualified Foreign Pension Plans—could theoretically continue, their protection under Sec. 899 has not yet been conclusively clarified.