The certifications in Part II must be included in a substitute form only if treaty benefits are claimed, and then only to the extent that the certifications are required. For example, Form W-8BEN, line 10 (Special rates and conditions), is not required if the form is being requested from an individual receiving a payment of U.S. source dividends from stocks that are actively traded on an established securities market. The substitute Form W-8BEN must include a statement that if the person providing the form is a resident in a FATCA partner jurisdiction (that is, a Model 1 IGA jurisdiction with reciprocity), certain tax account information may be provided to the jurisdiction of residence. If a QI checks line 15f of Part III of the form to certify that it assumes primary Form 1099 reporting and backup withholding responsibility, you may accept the form even if you do not know if there are any U.S. accounts receiving reportable payments at the time of the certification. However, a QI is not required to check line 15i of Part III of the form until it provides a withholding statement identifying an intermediary or flow-through entity that receives a payment allocated to a chapter 4 withholding rate pool of U.S. payees. However, if you are a partnership (or nominee for a PTP interest), you should request a Form W-8BEN or W-8BEN-E (as applicable) from a foreign partner that is allocated income that is ECTI for purposes of withholding under section 1446(a).

Section 1446 Requirements

• As such, you may need to seek legal guidance from a tax professional outside of Harvard University with specific business use inquires.
• Under section 6050W, a PSE is generally required to report payments made in settlement of payment card transactions or third-party network transactions.
• Part XXX – Certification, is stating that the signatory of the W-8BEN-E is empowered to sign on behalf of the foreign entity.
• If a contractor doesn’t submit a completed form timely or they provide invalid information, they may need to pay the full tax rate on their income, which is 30%.
• See Requesting Prior Versions of Form W-8, later, including the limitations on such use.

Form W-8IMY is the “Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting.” The purpose of the form is to certify that a person or business received withholdable payments on behalf of a foreigner or as a flow-through entity. The form is intended for intermediaries and should not be used by beneficial owners in a business. Form W-8BEN (“Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting”) must be submitted by foreign persons who receive certain types of income in the United States. The form, sometimes referred to as a “certificate of foreign status,” establishes that the individual is both a foreign what is a w8 person and the owner of the business in question. Form W-8 is not a single document but a series of forms, each catering to specific scenarios.

W-8 forms: What are they for and when are they needed

Read on to learn all you need to know about tax obligations when doing work in the US or with assets = liabilities + equity US workers in 2022.

Forms W-8 and W-9 in the USA: the essential guide

The W-8 form will collect information on who the individual or business is, where they’re from, and the types of income earned. Form W-8 BEN-E is used by foreign entities to document their status for purposes of chapter 3 and chapter 4, as well as other code provisions. On the transfer of a partnership interest (other than an interest in a PTP) to which withholding under section 1446(f) applies, the transferee is the withholding Retail Accounting agent and must withhold 10% of the amount realized. Real Property Interests; and Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S.

If you reside in a country that does not use street addresses, you may enter a descriptive address on line 3. The address must accurately indicate your permanent residence in the manner used in your jurisdiction. A participating payee means any person that accepts a payment card as payment or accepts payment from a third-party settlement organization in settlement of a third-party network transaction. A financial institution generally means an entity that is a depository institution, custodial institution, investment entity, or an insurance company (or holding company of an insurance company) that issues cash value insurance or annuity contracts. The tax compliance matter still needs to be handled, but it’s going to be according to the laws of the country where the company is located.

The student or researcher must use Form W-4 for any part of such income for which he or she is not claiming a tax treaty withholding exemption. A hybrid entity is any person (other than an individual) that is treated as fiscally transparent for purposes of its status under the Code but is not treated as fiscally transparent by a country with which the United States has an income tax treaty. While noted above that the default withholding rate for foreign individuals and entities is 30%, an individual can complete Part II (Claim of Tax Treaty Benefits) of the W-8 BEN to request a reduced withholding rate or a withholding exemption. They can only do this if they are a resident of a foreign country with which the U.S. has a tax treaty.

• He is an expert on personal finance, corporate finance and real estate and has assisted thousands of clients in meeting their financial goals over his career.
• For this purpose, you may use the list maintained at IRS.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z to check whether a treaty exists and is in force.
• The substitute Form W-8BEN-E must contain all of the information required in Part I, lines 1 through 6, and lines 8 and 9 if a U.S. or an FTIN or a GIIN is required.
• The forms vary, but the key information requested includes the name of the individual or business, address, and TIN.
• Understanding these special considerations helps prevent unnecessary tax withholding and ensures compliance with U.S. tax regulations.
• You should provide Form W-8BEN to a payment settlement entity (PSE) requesting this form if you are a foreign individual receiving payments subject to reporting under section 6050W (payment card transactions and third-party network transactions) as a participating payee.

QIs assuming withholding on payments of substitute interest.

Instead of being treated as a U.S. tax resident, the foreign individual or entity completing the W-8BEN can benefit from a reduced withholding rate or even complete tax exemption, depending on the tax treaty between the beneficiary’s country of residence and the United States. If you are an FFI documenting an account holder that is an individual and you are not making a payment of a reportable amount to such account holder, you may use a non-IRS form rather than a substitute Form W-8BEN. The form must include the name and address of the individual that is the payee or beneficial owner; all countries in which the individual is resident for tax purposes; the individual’s country of birth; a TIN, if any, for each country of residence; and the individual’s date of birth. The form may also request other information required for purposes of tax or anti-money laundering (AML) due diligence in the United States or in other countries. A form that satisfies these requirements may be treated as a similar agreed form for purposes of an applicable IGA unless the partner jurisdiction declines such treatment.

Nevertheless, a foreign partner that has made an election under section 871(d) or section 882(d) must provide that election to the partnership along with a Form W-8ECI. Your receipt of Form W-8ECI serves as a representation by the payee or beneficial owner that the items of income identified on line 11 are effectively connected with the conduct of a trade or business within the United States. Therefore, if a beneficial owner provides you with a Form W-8ECI, you may treat all of the U.S. source income identified on line 11 paid to that beneficial owner as effectively connected with the conduct of a trade or business within the United States and not as a withholdable payment for purposes of chapter 4. Accordingly, a chapter 4 status is not required for a payee who provides a valid Form W-8ECI unless you are an FFI requesting a Form W-8ECI from an account holder for purposes of your chapter 4 due diligence requirements. If you are claiming treaty benefits as a resident of a foreign country with which the United States has an income tax treaty for payments subject to withholding under chapter 3 or under section 1446(a) or (f), identify the country where you claim to be a resident for income tax treaty purposes. 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.