U.S. Trade or Business
Also called USTB
The factual threshold determining whether a foreign person's activities create a taxable U.S. presence.
In full
A "U.S. trade or business" is the threshold used to decide whether a foreign person's activity creates income connected to the United States. The law does not define it precisely; case law and Treasury rulings establish that considerable, continuous, and regular activity within the U.S. — directly or through dependent agents — creates a USTB. Single transactions and passive investment generally do not.
Governed by: U.S. trade or business test.
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.
- Permanent EstablishmentA fixed place of business or dependent agent creating jurisdiction to tax under a bilateral tax treaty.
- Dependent AgentA representative whose authority to bind the foreign principal creates U.S. taxing jurisdiction.