Section references are to the Internal Revenue Code unless otherwise noted.
Purpose of form.
Foreign persons are generally subject to U.S. tax at a 30% rate on income they receive from U.S. sources. However,
no withholding under section
1441 or 1442 is required on income that is, or is deemed to be, effectively connected with the conduct of a trade or business
in the United States and
is includible in the beneficial owner's gross income for the tax year.
The no withholding rule does not apply to personal services income and income subject to withholding under section
1445 (dispositions of U.S. real
property interests) or section 1446 (foreign partner's share of effectively connected income).
If you receive effectively connected income from sources in the United States, you must provide Form W-8ECI to:
Establish that you are not a U.S. person,
Claim that you are the beneficial owner of the income for which Form W-8ECI is being provided, and
Claim that the income is effectively connected with the conduct of a trade or business in the United States.
If you expect to receive both income that is effectively connected and income that is not effectively connected from
a withholding agent, you must
provide Form W-8ECI for the effectively connected income and Form W-8BEN (or Form W-8EXP or Form W-8IMY) for income that is
not effectively connected.
If you submit 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 section 1446. If a nominee holds an interest in a partnership on your behalf, you, not the nominee, must
submit the form to the
partnership or nominee that is the withholding agent.
If you are a foreign partnership, a foreign simple trust, or a foreign grantor trust with effectively connected income,
you may submit Form W-8ECI
without attaching Forms W-8BEN or other documentation for your foreign partners, beneficiaries, or owners.
A withholding agent or payer of the income may rely on a properly completed Form W-8ECI to treat the payment associated
with the Form W-8ECI as a
payment to a foreign person who beneficially owns the amounts paid and is either entitled to an exemption from withholding
under sections 1441 or 1442
because the income is effectively connected with the conduct of a trade or business in the United States or subject to withholding
under section 1446.
Provide Form W-8ECI to the withholding agent or payer before income is paid, credited, or allocated to you. Failure
by a beneficial owner to
provide a Form W-8ECI when requested may lead to withholding at the 30% rate or the backup withholding rate.
Giving Form W-8ECI to the withholding agent.
Do not send Form W-8ECI to the IRS. Instead, give it to the person who is requesting it from you. Generally, this
will be the person from whom you
receive the payment, who credits your account, or a partnership that allocates income to you. Give Form W-8ECI to the person
requesting it before the
payment is made, credited, or allocated. If you do not provide this form, the withholding agent may have to withhold at the
30% rate or the backup
withholding rate. A separate Form W-8ECI must be given to each withholding agent.
Expiration of Form W-8ECI.
Generally, a Form W-8ECI will remain in effect for a period starting on the date the form is signed and ending on
the last day of the third
succeeding calendar year, unless a change in circumstances makes any information on the form incorrect. For example, a Form
W-8ECI signed on September
30, 2005, remains valid through December 31, 2008. Upon the expiration of the 3-year period, you must provide a new Form W-8ECI.
For payments other than those for which a reduced rate of withholding is claimed under an income tax treaty, the beneficial
owner of income is
generally the person who is required under U.S. tax principles to include the income in gross income on a tax return. A person
is not a beneficial
owner of income, however, to the extent that person is receiving the income as a nominee, agent, or custodian, or to the extent
the person is a
conduit whose participation in a transaction is disregarded. In the case of amounts paid that do not constitute income, beneficial
determined as if the payment were income.
Foreign partnerships, foreign simple trusts, and foreign grantor trusts are not the beneficial owners of income paid
to the partnership or trust.
The beneficial owners of income paid to a foreign partnership are generally the partners in the partnership, provided that
the partner is not itself a
partnership, foreign simple or grantor trust, nominee or other agent. The beneficial owners of income paid to a foreign simple
trust (that is, a
foreign trust that is described in section 651(a)) are generally the beneficiaries of the trust, if the beneficiary is not
a foreign partnership,
foreign simple or grantor trust, nominee or other agent. The beneficial owners of a foreign grantor trust (that is, a foreign
trust to the extent that
all or a portion of the income of the trust is treated as owned by the grantor or another person under sections 671 through
679) are the persons
treated as the owners of the trust. The beneficial owners of income paid to a foreign complex trust (that is, a foreign trust
that is not a foreign
simple trust or foreign grantor trust) is the trust itself.
Generally, these beneficial owner rules apply for purposes of sections 1441, 1442, and 1446, except that section 1446
requires a foreign simple
trust to provide a Form W-8 on its own behalf rather than on behalf of the beneficiary of such trust.
The beneficial owner of income paid to a foreign estate is the estate itself.
A payment to a U.S. partnership, U.S. trust, or U.S. estate is treated as a payment to a U.S. payee. A U.S. partnership,
trust, or estate should
provide the withholding agent with a Form W-9. However, for purposes of section 1446, a U.S. grantor trust shall not provide
the withholding agent a
Form W-9. Instead, the grantor or other owner must provide Form W-8 or Form W-9 as appropriate.
A business entity that has a single owner and is not a corporation under Regulations section 301.7701-2(b) is disregarded
as an entity separate
from its owner.
A disregarded entity shall not submit this form to a partnership for purposes of section 1446. Instead, the owner
of such entity shall provide
appropriate documentation. See Regulations section 1.1446-1.
Effectively connected income.
Generally, when a foreign person engages in a trade or business in the United States, all income from sources in the
United States other than fixed
or determinable annual or periodical (FDAP) income (for example, interest, dividends, rents, and certain similar amounts)
is considered income
effectively connected with a U.S. trade or business. FDAP income may or may not be effectively connected with a U.S. trade
or business. Factors to be
considered to determine whether FDAP income and similar amounts from U.S. sources are effectively connected with a U.S. trade
or business include
The income is from assets used in, or held for use in, the conduct of that trade or business, or
The activities of that trade or business were a material factor in the realization of the income.
There are special rules for determining whether income from securities is effectively connected with the active conduct
of a U.S. banking,
financing, or similar business. See section 864(c)(4)(B)(ii) and Regulations section 1.864-4(c)(5)(ii) for more information.
Effectively connected income, after allowable deductions, is taxed at graduated rates applicable to U.S. citizens
and resident aliens, rather than
at the 30% rate. You must report this income on your annual U.S. income tax or information return.
A partnership that has effectively connected income allocable to foreign partners is generally required to withhold
tax under section 1446. The
withholding tax rate on a partner's share of effectively connected income is 35%. In certain circumstances the partnership
may withhold tax at the
highest applicable rate to a particular type of income (for example long-term capital gain allocated to a noncorporate partner).
Any amount withheld
under section 1446 on your behalf, and reflected on Form 8805 issued by the partnership to you may be credited on your U.S.
income tax return.
A foreign person includes a nonresident alien individual, a foreign corporation, a foreign partnership, a foreign
trust, a foreign estate, and any
other person that is not a U.S. person.
Nonresident alien individual.
Any individual who is not a citizen or resident alien of the United States is a nonresident alien individual. An alien
individual meeting either
the “green card test
” or the “substantial presence test
” for the calendar year is a resident alien. Any person not meeting either test is a
nonresident alien individual. Additionally, an alien individual who is a resident of a foreign country under the residence
article of an income tax
treaty, or an alien individual who is a bona fide resident of Puerto Rico, Guam, the Commonwealth of the Northern Mariana
Islands, the U.S. Virgin
Islands, or American Samoa is a nonresident alien individual.
Even though a nonresident alien individual married to a U.S. citizen or resident alien may choose to be treated as a resident
alien for certain
purposes (for example, filing a joint income tax return), such individual is still treated as a nonresident alien for withholding
tax purposes on all
income except wages.
See Pub. 519, U.S. Tax Guide for Aliens, for more information on resident and nonresident alien status.
Any person, U.S. or foreign, that has control, receipt, or custody of an amount subject to withholding or who can
disburse or make payments of an
amount subject to withholding is a withholding agent. The withholding agent may be an individual, corporation, partnership,
trust, association, or any
other entity including (but not limited to) any foreign intermediary, foreign partnership, and U.S. branches of certain foreign
banks and insurance
companies. Generally, the person who pays (or causes to be paid) an amount subject to withholding to the foreign person (or
to its agent) must