§00Mechanism · Glossary
Portfolio Interest Exception
A carve-out exempting qualifying interest paid to foreign lenders from U.S. withholding.
In full
Under the portfolio interest exception, interest paid on registered obligations to qualifying foreign lenders is exempt from the default withholding regime that would otherwise apply. The exception requires the lender to own less than 10% of the borrower (by vote, for corporations) and to certify foreign status via W-8BEN-E. Widely used for intercompany debt and foreign-sourced acquisition financing.
Governed by: Portfolio interest exception 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.