What is it?
The W8-BEN Form, also called the Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding & Reporting, is a form required by the IRS, similar to the W9 form that employees and subcontractors in the United States must submit to employers.
However, the W8-BEN differs from a W9 because it is filled out only by non-US residents who are receiving payments from individuals or companies in the United States.
Why do you need it?
The IRS requires that taxes be paid on income paid to entities outside of the United States.
Typically, this rate is 30%, but it can differ from one foreign country to the next. The W8-BEN must be filled out by a non-US entity receiving compensation from a US entity.
It ensures that the individual or company issuing payment knows to withhold taxes from payment, and to subsequently pay those taxes to the IRS.
If you’re a company or individual paying non-US entities, you will be held liable by the IRS for the taxes that should be withheld from payments you send them, which makes it important to have a W8-BEN on file for these entities.
Tips and instructions for use
The W8-BEN is a single page form with three sections:
- Part 1: Identification of beneficial owner
This section is used to identify the owner of the income, otherwise known as the “beneficial owner”. Be sure to provide accurate information including your name, country of citizenship (determines tax withholding rate), address, U.S. or foreign Taxpayer ID number, and date of birth.
- Part 2: Claim of tax treaty benefits
The United States has tax treaties in place with some foreign countries which offers citizens a lower withholding rate than the standard 30%. In this section, you will note which treaty your taxes are subject to, and at what rate they should be withheld from payments made to you.
- Part 3: Certification
The IRS takes tax forms very seriously. Part three of the W8-BEN requires you to certify that the information provided on the form is complete and accurate, and that you are in compliance with a list of standards associated with the form.
Like the W9, the W8-BEN is not submitted to the IRS. Instead, it’s submitted to the US entity issuing payment, and they keep it in their records.
If you’re a company outside the United States and receiving payments from US entities, you’ll use the W8-BEN-E version of this form instead of the standard version.