FDAP
U.S.-source passive income paid to non-residents, generally subject to 30% gross withholding (often reduced by treaty).
Fixed, Determinable, Annual or Periodical (FDAP) income is the IRS classification for U.S.-source passive income paid to non-residents — interest, dividends, royalties, rents, certain service fees, prizes. FDAP is taxed on a gross basis at a default 30% withholding rate, with no deductions allowed. Treaty positions on Form W-8BEN can reduce the rate (often to 10–15% for dividends, 0% for treaty-favored interest). The classification opposite to FDAP is ECI.
Also known asFixed, Determinable, Annual or Periodical Income
Related terms
- ECI — Income that a non-resident earns through a U.S. trade or business, taxed at U.S. graduated rates rather than t…
- Form W-8BEN — The IRS form a non-U.S. individual gives to a U.S. payer to certify foreign status and claim treaty benefits.…
- Form 1042-S — The IRS information return that U.S. payers issue to non-residents to report U.S.-source income subject to wit…