Foreign Entities and W-8 Forms International Payee Tax Compliance

What we suggest after filling out the W-8 BEN-E is saving it as a PDF and store it on your device. This will enable you to go through any potential mistake you’ve made on the form and furnish the same copy to different payers. For a list of Car Dealership Accounting jurisdictions treated as having in effect a Model 1 or Model 2 IGA, see the list of jurisdictions at /resource-center/tax-policy/treaties/Pages/FATCA-Archive.aspx. Chapter 4 means chapter 4 of the Internal Revenue Code (Taxes to Enforce Reporting on Certain Foreign Accounts). For the latest information about developments related to Form W-8BEN and its instructions, such as legislation enacted after they were published, go to IRS.gov/FormW8BEN.

Form W-8BEN-E Late Payment Penalty

Generally, for purposes of sections 1446(a) and (f), the same beneficial owner rules apply, except that under section 1446(a) and (f) a foreign simple trust is required to provide a Form W-8 on its own behalf rather than on behalf of the beneficiary of such trust. An account holder is generally the person listed or identified as the holder or owner of a financial account. For example, if a partnership is listed as the holder or owner of a financial account, then the partnership is the account holder, rather than the partners of the partnership (subject to what is a w8 some exceptions).

What Information Do You Need to Complete Form W-8?

However, if the income is effectively connected with the conduct of a U.S. trade or business, it is reportable by you on Form 1042-S (regardless of whether the payment is U.S. source income). The Foreign Account Tax Compliance Act (FATCA) has significantly influenced global financial transparency by targeting tax evasion among U.S. taxpayers with foreign assets. For foreign entities interacting with the U.S., compliance is essential to avoid withholding taxes and penalties.

Who Must Provide Form W-8BEN

This section underscores the importance of understanding international tax treaties and their implications. Entities are categorized based on their nature and activities, including financial institutions and non-financial foreign entities. Financial institutions are further divided into custodial institutions, depository institutions, investment entities, and specified insurance companies, each with distinct responsibilities like reporting account information or withholding taxes. Non-financial foreign entities must identify substantial U.S. owners and report this information to the IRS. Form W-8BEN must be signed and dated by the beneficial owner of the amount subject to withholding or the account holder of an FFI (or an agent with legal authority to act on the person’s behalf).

The W-8BEN-E is the most commonly used W-8 form, which is only to be completed by foreign entities, not individuals. Since Harvard University is not a financial institution, only a few parts are required to be completed before Harvard University is able to issue payments to a foreign entity. However, other parts might also be necessary when conducting business with other withholding agents. As such, you may need to seek legal guidance from a tax professional outside of Harvard University with specific business use inquires.

Instructions for the Requester of Forms W-8BEN, W-8BEN-E, W-8ECI, W-8EXP, and W-8IMY (06/

Implementing a checklist system can ensure all relevant fields are completed before submission. Additionally, leveraging tax software like TurboTax Business can streamline the process, reducing the likelihood of omissions. Income from transactions with a broker or a barter exchange is subject to reporting rules and backup withholding unless Form W-8BEN or a substitute form is filed to notify the broker or barter exchange that you are an exempt foreign person.

• If a Form W-8 is valid except that the person providing the form has not dated the form, you may date the form from the day you receive it and measure the validity period from that date.
• You should request the Form W-8IMY from the foreign partnership regardless of whether the partnership provides with the form the partner information for allowing withholding on a modified amount realized under Regulations section 1.1446(f)-2(c) or 1.1446(f)-4(c).
• A nonresident alien student (including a trainee or business apprentice) or researcher who receives noncompensatory scholarship or fellowship income can use Form W-8BEN to claim benefits under a tax treaty that apply to reduce or eliminate U.S. tax on such income.
• As form W-9 only serves to identify the contractor and get their personal information, another form must be completed to prove to the IRS that an independent worker will pay their taxes.
• Since their income is “effectively connected” to U.S. trade, they must file Form W-8ECI to report and pay taxes on their earnings.
• Your permanent residence address is the address in the country where you claim to be a resident for purposes of that country’s income tax.

• It helps these entities certify the foreign status of the beneficial owners and other intermediaries.
• If you reside in a country that does not use street addresses, you may enter a descriptive address on line 3.
• This document offers a comprehensive guide for foreign entities on completing Form W-8BEN-E, which is used to certify their status as the beneficial owner of income for U.S. tax withholding and reporting purposes.
• FATCA has transformed international finance by imposing reporting obligations on foreign financial institutions and certain non-financial foreign entities.
• For treaty purposes, a person is a resident of a treaty country if the person is a resident of that country under the terms of the treaty.
• A Chinese student who qualifies for this exception (under paragraph 2 of the first protocol) and is relying on this exception to claim an exemption from tax on his or her scholarship or fellowship income would complete Form W-9.

For example, a non-resident foreigner who earns interest or dividends from U.S.-issued securities would likely file a W-8BEN, while a foreign nonprofit with operations in the U.S. might need to file form W-8ECI. Former U.S. residents who earn retirement income, or who occasionally perform freelance work for U.S. clients, might also have bookkeeping to submit the form to reduce their tax withholdings. W-8 forms are filled out by foreign individuals or entities that lack U.S. citizenship or residency, but have worked in the U.S. or earned income in the U.S.