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Forms for Foreign Beneficial Owners

If all the appropriate requirements have been established on a Form W-8BEN (PDF), W-8ECI (PDF), W-8EXP (PDF) or, if applicable, on documentary evidence, you may treat the payee as a foreign beneficial owner.

W-8BEN

W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, is used by a foreign person to:

  1. Establish foreign status,
  2. Claim that such person is the beneficial owner of the income for which the form is being furnished, and
  3. If applicable, claim a reduced rate of, or exemption from, withholding under an income tax treaty.

Form W-8BEN may also be used to claim that the foreign person is exempt from Form 1099 reporting and backup withholding for income that is not subject to NRA withholding. For example, a foreign person may provide a Form W-8BEN to a broker to establish that the gross proceeds from the sale of securities are not subject to Form 1099 reporting or backup withholding. Refer to Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities for more information.

Claiming Treaty Benefits

You may apply a reduced rate of withholding to a foreign person that provides a Form W-8BEN claiming a reduced rate of withholding under an income tax treaty only if the person provides a U.S. TIN (unless the exception discussed below under Marketable securities applies) and certifies that:

  • It is a resident of a treaty country.
  • It is the beneficial owner of the income.
  • If it is an entity, it derives the income within the meaning of section 894 of the Internal Revenue Code (it is not fiscally transparent).
  • It meets any limitation on benefits provision contained in the treaty, if applicable.

If the foreign beneficial owner claiming a treaty benefit is related to you, the foreign beneficial owner must also certify on Form W-8BEN that it will file Form 8833 (PDF), Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), of the Internal Revenue Code, if the amount subject to NRA withholding received during a calendar year exceeds, in the aggregate, $500,000.

An entity derives income for which it is claiming treaty benefits only if the entity is not treated as fiscally transparent for that income. Refer to Fiscally transparent entities discussed under Flow-Through Entities.

Limitations on benefits provisions generally prohibit third country residents from obtaining treaty benefits. For example, a foreign corporation may not be entitled to a reduced rate of withholding unless a minimum percentage of its owners are citizens or residents of the United States or the treaty country.

The exemptions from, or reduced rates of, U.S. tax vary under each treaty. You must check the provisions of the tax treaty that apply. Tables at the end of Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, and Publication 901, U.S. Tax Treaties, show the countries with which the United States has income tax treaties and the rates of withholding that apply in cases where all conditions of the particular treaty articles are satisfied.

If a nonresident alien individual has made an election with his or her U.S. citizen or resident spouse to be treated as a U.S. resident for income tax purposes, the nonresident alien may not claim to be a foreign resident to obtain the benefits of a reduced rate of, or exemption from, U.S. income tax under an income tax treaty.

If you know, or have reason to know, that an owner of income is not eligible for treaty benefits claimed, you must not apply the treaty rate. You are not, however, responsible for misstatements on a Form W-8, documentary evidence, or statements accompanying documentary evidence for which you did not have actual knowledge, or reason to know that the statements were incorrect.

Exceptions to TIN Requirement

A foreign person does not have to provide a TIN to claim a reduced rate of withholding under a treaty if the requirements for the following exceptions are met.

Marketable Securities

A Form W-8BEN provided to claim treaty benefits does not need a U.S. TIN if the foreign beneficial owner is claiming the benefits on income from marketable securities. For this purpose, income from a marketable security consists of the following items:

  • Dividends and interest from stocks and debt obligations that are actively traded.
  • Dividends from any redeemable security issued by an investment company registered under the Investment Company Act of 1940(mutual fund).
  • Dividends, interest, or royalties from units of beneficial interest in a unit Investment trust that are (or were upon issuance) publicly offered and are registered with the SEC under the Securities Act of 1933.
  • Income related to loans of any of the above securities.

Offshore Accounts

If a payment is made outside the United States to an offshore account, a payee may give you documentary evidence, rather than Form W-8BEN.

Generally, a payment is made outside the United States if you complete the acts necessary to effect the payment outside the United States. However, an amount paid by a bank or other financial institution on a deposit or account will usually be treated as paid at the branch or office where the amount is credited. An offshore account is an account maintained at an office or branch of a U.S. or foreign bank or other financial institution at any location outside the United States. (Treas. Reg. 1.1441-1(e)(1)(ii)(2), Treas. Reg. 1.6049-5(c)(1), Treas. Reg. 1.6049-5(e), Notice 2001-4)

You may rely on documentary evidence given to you by a nonqualified intermediary or a flow-through entity with its Form W-8IMY. This rule applies even though you make the payment to a nonqualified intermediary or flow-through entity in the United States. Generally, the nonqualified intermediary or flow-through entity that gives you documentary evidence will also have to give you a withholding statement.

Documentary Evidence

You may apply a reduced rate of withholding to income from "marketable securities" paid outside the United States to an offshore account if the beneficial owner gives you documentary evidence in place of a Form W-8BEN.

To claim treaty benefits, the documentary evidence must be one of the following:

  1. A certificate of residence that:
    1. Is issued by a tax official of the treaty country of which the foreign beneficial owner claims to be a resident.
    2. States that the person has filed its most recent income tax return as a resident of that country, and
    3. Is issued within 3 years prior to being presented to you.
  2. Documentation for an individual that:
    1. Includes the individual's name, address, and photograph,
    2. Is an official document issued by an authorized governmental body, and
    3. Is issued no more than 3 years prior to being presented to you.
  3. Documentation for an entity that:
    1. Includes the name of the entity,
    2. Includes the address of its principal office in the treaty country, and
    3. Is an official document issued by an authorized governmental body.

In addition to the documentary evidence, a foreign beneficial owner that is an entity must provide a statement that it derives the income for which it claims treaty benefits and that it meets one or more of the conditions set forth in a limitation on benefits article, if any, (or similar provision) contained in the applicable treaty.

Form W-8ECI

W-8ECI, Certificate of Foreign Person's Claim for Exemption From Withholding on Income Effectively Connected With the Conduct of a Trade or Business in the United States, is used by a foreign person to:

  • Establish foreign status,
  • Claim that such person is the beneficial owner of the income for which the form is being furnished, and
  • Claim that the income is effectively connected with the conduct of a trade or business in the United States. (Refer to Effectively Connected Income)

Effectively connected income for which a valid Form W-8ECI has been provided is generally not subject to NRA withholding. However you may not use Form W-8ECI to exempt pay for personal services performed by an individual from withholding.

If a partner submits this form to a partnership, the income claimed to be effectively connected with the conduct of a U.S. trade or business is subject to withholding under IRC section 1446. If the partner has made, or will make, an election under IRC sections 871(d) or 882(d), the partner must submit Form W-8ECI, and attach a copy of the election, or a statement of intent to elect, to the form.

If the partner's only effectively connected income is the income allocated from the partnership and the partner is not making the election under IRC sections 871(d) or 882(d), the partner should provide Form W-8BEN to the partnership.

Refer to Withholding Exemption.

Form W-8EXP

W-8EXP, Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding is used by a foreign government, international organization, foreign central bank of issue, foreign tax-exempt organization, foreign private foundation, or government of a U.S. possession to:

  • Establish foreign status,
  • Claim that such person is the beneficial owner of the income for which the form is being furnished, and
  • Claim a reduced rate of, or an exemption from, withholding as such an entity.

If the government or organization is a partner in a partnership carrying on a trade or business in the United States, the effectively connected income allocable to the partner is subject to withholding under IRC section 1446.

References/Related Topics

Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court.

Page Last Reviewed or Updated: 23-Mar-2014