Question 1. Olson and Johnson are wealthy investors who were born and raised in Sweden. Each owns half of International Lenders, Ltd. ("ILL), a corporation organized and headquartered in Stockholm. ILL makes equity investments and loans all over the world. Several years ago, ILL loaned $100 million to the American Fish Company ("AmFish"), a US corporation that operates solely in the United States. AmFish pays interest annually of $10 million on debt that does not qualify as a portfolio investment. The principal of the loan is to be paid at the end of ten years. Assume that U.S. Model Traty applies between Sweden and the United States. Are interest payments by AmFish to ILL subject to the US withholding tax?
Question 2. Does your answer in Problem 1 change if Olson retires and moves to Brazil, a country with the United States has no tax treaty?
Question 3. How, if al all, does your answer in Problem 1 change if Olson and Johnson sell all of their stock to Superrich Corp., a corporation organized and operated in Brazil?