The income tax treaty can reduce US tax on income paid to Canadians down to zero, depending on the type of income. That's what you are seeing with the W-8BEN.
For selling stuff across borders, source of income is where ownership changes hands from seller to buyer. If the buyer owns the item as soon as it goes into a DHL pouch in Canada, then it is Canadian-source income and the US can't tax it.
I guess my question was: is a return required on US source income that has been reduced to zero? e.g. royalty payments, where the receiver is in Canada, and sales of products were made in USA.
Assume the income is from licensing, and the license was granted from a Canadian source.
Thanks for answering all these, I should have been more precise with my earlier questions.
Comments
The income tax treaty can reduce US tax on income paid to Canadians down to zero, depending on the type of income. That's what you are seeing with the W-8BEN.
For selling stuff across borders, source of income is where ownership changes hands from seller to buyer. If the buyer owns the item as soon as it goes into a DHL pouch in Canada, then it is Canadian-source income and the US can't tax it.
I guess my question was: is a return required on US source income that has been reduced to zero? e.g. royalty payments, where the receiver is in Canada, and sales of products were made in USA.
Assume the income is from licensing, and the license was granted from a Canadian source.
Thanks for answering all these, I should have been more precise with my earlier questions.