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January 5, 2024

US Treasury adds Chile to the list of treaty countries that meet the requirements of IRC Section 1(h)(11), removes Russia and Hungary

In Notice 2024-11 (Notice), issued 28 December 2023, the United States (US) Treasury Department (Treasury) and the Internal Revenue Service (IRS) updated the list of treaty partner countries that are relevant in determining whether a corporation is a "qualified foreign corporation" for purposes of applying IRC Section 1(h)(11). Under IRC Section 1(h)(11), reduced tax rates may apply to a dividend paid to an individual shareholder from a domestic corporation or a qualified foreign corporation.

Since this list was updated in 2011, a new US income tax treaty with Chile entered into force on 19 December 2023, so the Notice adds Chile to the list. Additionally, the Notice provides that US income tax treaties with Russia and Hungary no longer meet the requirements of IRC Section 1(h)(11)(C)(i)(II), so those countries are removed from the list.

The Notice is effective with respect to Chile for dividends paid on or after 19 December 2023. For Hungary and Russia, the Notice is effective for dividends paid on or after 8 January 2023 and 1 January 2023, respectively.


Enacted as part of the Jobs and Growth Tax Relief Reconciliation Act of 2003, IRC Section 1(h)(11) generally reduces rates of federal income tax on qualified dividend income (QDI) for tax years beginning after 31 December 2002. The law defines QDI as dividends received by individuals during the tax year from domestic corporations and "qualified foreign corporations." Subject to certain exceptions, a qualified foreign corporation is any foreign corporation:

  • That is incorporated in a US possession
  • That is eligible for benefits under a comprehensive income tax treaty with the US that the Secretary of the Treasury determines is satisfactory for purposes of QDI treatment and includes an exchange of information program (Treaty Test)
  • Whose stock, with respect to any dividend paid by the foreign corporation, is readily tradable on an established securities market in the US

A qualified foreign corporation, however, does not include a corporation that is a passive foreign investment company during the year in which the dividend was paid or during the preceding tax year. Moreover, QDI does not include dividends paid on any share of stock with respect to which the holding period under IRC Section 246(c) (as modified by IRC Section 1(h)(11)(B)(iii)(I)) is not met.

To be treated as a qualified foreign corporation under the Treaty Test, a foreign corporation must be eligible for benefits of one of the US income tax treaties listed in the Notice. Accordingly, the foreign corporation must be a resident within the meaning of such term under the relevant treaty and must satisfy any other requirements of that treaty, including the requirements under any applicable limitation-on-benefits provision.

The Notice

The Notice amplifies and supersedes Notice 2011-64, providing an updated list of US income tax treaties that meet the Treaty Test under IRC Section 1(h)(11). Since the publication of Notice 2011-64, (a) the US-Chile Treaty entered into force on 19 December 2023; (b) the US-Hungary Treaty terminated on 8 January 2023; and (c) Treasury announced that the IRS paused assistance to Russian tax authorities through exchange of information under the US-Russia Treaty on 5 April 2022.

Accordingly, the Notice adds the US-Chile Treaty to the list of US income tax treaties that meet the Treaty Test under IRC Section 1(h)(11)(C)(i)(II). The Notice is effective with respect to Chile for dividends paid on or after 19 December 2023.

Further, the Notice removes the US-Hungary Treaty, which terminated on 8 January 2023. Accordingly, the Notice is effective with respect to Hungary for dividends paid on or after 8 January 2023. The Notice also removes the US-Russia Treaty because it no longer meets the Treaty Test. The Notice is effective with respect to Russia for dividends paid on or after 1 January 2023.

Besides the changes noted previously, the Notice does not further update the list of US income tax treaties that meet the Treaty Test. The complete list of US income tax treaties satisfying the Treaty Test, as updated by the Notice, is as follows:















Trinidad and Tobago



















Slovak Republic

United Kingdom









South Africa







Czech Republic



Sri Lanka




New Zealand




Individual shareholders of Chilean resident corporations may now be eligible for a reduced tax rate on dividends paid on or after 19 December 2023 from those corporations. Taxpayers should determine whether those corporations are qualified foreign corporations meeting the requirements of IRC Section 1(h)(11), and evaluate residence and limitation-on-benefits requirements under the US-Chile Treaty. Dividends paid by corporations resident in Hungary and Russia are no longer eligible for reduced tax rates under IRC Section 1(h)(11), effective for dividends paid on or after 8 January 2023 and 1 January 2023, respectively.

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Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young LLP (United States), Washington, DC

Published by NTD’s Tax Technical Knowledge Services group; Maureen Sanelli, legal editor

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