Adding a layer of complication, different types of investors qualify for different tax rates. For example, tax-exempt entities like pensions, charities, and endowments often qualify for a 0% treaty rate and can thus recover all over-withheld tax, provided they submit appropriate documentation.

In addition, different types of investors must follow often different processes to recover taxes. Two common categorizations are “opaque” and “transparent” entities. “Opaque” structures are identified as the end investor by the tax authority. Examples include individuals, pensions, and charities.

By contrast, “transparent” entities (LPs, LLCs, most trusts, etc.) have underlying beneficiaries. Tax authorities often wish to ‘look through’ these entities to understand the underlying holders. As a result, more documentation on the beneficiary level is often required. A document summarizing common entity types can be found here.