FDAP
Also called Fixed, Determinable, Annual, Periodical
U.S.-source passive income subject to 30% withholding at source (reducible by treaty) — dividends, interest, royalties, certain service income.
In full
FDAP income is U.S.-source income to foreign persons that is fixed, determinable, annual, or periodical — dividends, interest, royalties, rents, and certain service fees. It is subject to 30% withholding at source, without any allowance for deductions, whether it is paid to an individual or to a corporation. Where a treaty applies and the claim is properly supported by a Part III W-8BEN-E, the statutory rate may be reduced; the applicable rate is set by the specific treaty article and the taxpayer's facts.
Governed by: Withholding at source rules.
This definition is general information about how the term is used in U.S. cross-border tax. It is not advice, and how it applies depends on your own facts and on the treaty, if any, in force with your country.
Related terms
- Effectively Connected IncomeIncome from a U.S. trade or business taxed at graduated rates after deductions, rather than the flat 30% FDAP withholding.
- W-8BEN-EIRS form used by foreign entities to claim treaty benefits and certify FATCA status.
- Treaty ClaimA formal claim under a bilateral tax treaty for reduced withholding or full exemption from U.S. tax.