How to complete the W-8BEN-E form is not a party trick or something to impress your friends. It’s a must do if you're a non-US tax resident company, partnership or a charity receiving income from the United States.
Do you want to stop 30% withholding tax from being applied to your income?
If you are a non-US resident company, partnership or charity receiving income from the United States then it is imperative that you complete the W-8BEN-E form. This form stops 30% withholding tax being applied to your income. Your US client, your US payer has no choice in the matter.
Read on and watch the video. Correctly completing the form W-8BEN-E means that you stop 30% withholding tax being applied to your income. Your US client, your US payer has no choice in the matter.
What is the W-8BEN-E form ?
Forms and tax go together like a cheese and jam. chips and gravy, pineapple and pizza. The W-8BEN-E form is a member of the W-8 form family and is issued by the US equivalent of HMRC, the Internal Revenue Service (IRS). Foreign individuals and businesses must file to verify their country of residence for tax purposes, certifying that they qualify for a lower rate of tax withholding.
The W-8 forms are issued by the IRS, but are submitted only to payers or withholding agents, not to the IRS. Failure to submit the form results in a withholding tax at 30% for foreign entities.
Firstly, there are two main variations of the form W8. Form W-8-BEN for individuals and sole traders, on the other hand W-8BEN-E is for foreign companies, partnerships, charities, and corporations.
Furthermore non-U.S. businesses must provide the Form W-8BEN-E for the same sources of income that would require an individual to file a Form W-8BEN.
What does the W-8BEN-E form look like?
The form is similar but different to the W-8BEN form. The purpose of the form is the same, to establish your country of tax residency and that you qualify for a reduced rate of withholding tax. The difference is that the W-8BEN-E, at 30 sections looks more intimidating than the W-8-BEN form. Firstly, most of is unlikely to apply to most companies. Secondly, I have recorded an example for you, so that should make it less scary. Click here to get the official IRS instructions
Single shareholder companies
There are different tax and business structures in the US. One example is the C corporation , the most common form , which is taxed like UK limited companies.
Moreover, single shareholder companies are not recognized as US C corporations, which are limited company as we know them in the UK. If you are a single member company that wants to be taxed as C Corporation then complete Form 8832. Select the answer that says ‘A foreign entity electing to be classified as an association taxable as a corporation’. Seek help if unsure.
What is Form 8832?
A single director-shareholder company and you tick the corporation box, there are two additional forms that you must complete. They are Forms SS-4 and Form F8832. The Form SS-4 to apply for an employer identification number (EIN). An EIN is a 9-digit number (for example, 12-3456789) assigned to employers, sole proprietors, corporations, partnerships, estates, trusts, certain individuals, and other entities for tax filing and reporting purposes.
Above all I hope you found this vlog-blog useful on How to complete the W-8BEN-E form. Tax and forms are intertwined and you need to keep on top of. Whether it's trading with Europe, US or the the rest of the world, International tax impacts more of us. Get in touch with us to see how we can help your with tax and other accounting and business matters. For more business and finance , news, advice and tips, don’t forget to watch our weekly broadcasts, listen to our weekly podcast I Hate Numbers.