The U.S. Internal Revenue Service has issued a new provision under Section 1446(f) of the Internal Revenue Code (“IRC”) which primarily impacts non-U.S. persons who invest in U.S. PTP securities. With effect from 1 January 2023, such investors will generally incur an additional 10% withholding tax on gross proceeds from the sale, trade, or transfer of U.S. PTP securities which give rise to income effectively connected with the conduct of a U.S. trade or business.
With this in mind, we are taking the following actions
2. Existing positions in U.S. PTP securities can still be reduced or closed by placing orders via the platform, until 16 December 2022.
3. From 20 - 31 December 2022, we will liquidate any remaining holdings in U.S. PTP securities.
Please click here for more information about the U.S. PTP withholding tax and here for the list of U.S. PTP securities that are in scope for Section 1446(f) of the IRC (“List”). Kindly note that this list is non-exhaustive and may be subject to change at any time without prior notice. We assume no responsibility for the accuracy and completeness of the List and encourage you to review your investment portfolio to close or transfer out any existing holdings in U.S. PTP securities before 16 December 2022.
Why cannot Saxo keep providing the PTP securities?
It is worth noting that the regulation means the entire investment on the PTP securities would incur the additional 10% withholding tax, not only the profit.
The US withholding tax process for publicly traded partnerships is a very complex process to run and Saxo along with many other banks and brokers has decided to not make this offering anymore.
Which instruments are affected?
Click here for the list. Kindly note that this list is non-exhaustive and may be subject to change at any time without prior notice.
The ISINs in the list affect both stocks/ETFs and stock options.
CFDs on the ISINs are not affected. You can continue to trade the CFDs based on the ISINs in the list.
Which brokers will continue to offer PTP securities?
We are unable to advise.
Is it possible to delay the force close of positions after 31 December?
No, unfortunately, this is not possible.
Can I transfer the instruments out to other banks/brokers?
Yes, you can. Please double-check with your bank/broker that they can accept the positions before you initiate the transfer. How to transfer shares
Please note if the transfer is not successful before 1 January, the positions that remain in the Saxo account will still be liquidated.
What happens if I hold instruments with other brokers after 1 January?
Saxo is unable to advise clients on tax matters. Below is from the US IRS, which indicates client pays 10% WHT on the amount realized upon disposition of PTP.
“Under IRC section 1446(f)(1), a transferee of an interest in a partnership must withhold 10% of the amount realized on the disposition of an interest in a partnership if any portion of the gain (if any) on the disposition would be treated under IRC section 864(c)(8) as effectively connected with the conduct of a trade or business within the United States. A transfer can occur when a partnership distribution results in gain under IRC section 731.”
If you have further inquiries, please contact us.