Beneficial owners and documentation


Generally, you (the Withholding Agent) must withhold 30% from the gross amount paid to a foreign payee unless you can reliably associate the payment with valid documentation that establishes all the following:

  1. The payee is a U.S. person,
  2. The payee is a foreign person that is the beneficial owner of the income and is entitled to a reduced rate of withholding,
  3. Any intermediaries and the beneficial owner are FATCA compliant.

Generally, you must obtain the documentation before you make the payment. The documentation is not valid if you know, or have reason to know, that it is unreliable or incorrect. See Standards of Knowledge.

If you cannot reliably associate a payment with valid documentation, you must use the presumption rules. For example, if you do not have documentation or you cannot determine the portion of a payment that is allocable to specific documentation, you must use the presumption rules.

Joint owner

If you (the Withholding Agent) make a payment to joint owners, you need to obtain documentation from each owner.

Form W-9

Generally, you can treat the payee as a U.S. person if the payee gives you a Form W-9. The Form W-9 can only be used by a U.S. person and must contain the payee's Taxpayer Identification Number (TIN). If there is more than one owner, you may treat the total amount as paid to a U.S. person if any one of the owners gives you a Form W-9. U.S. persons are not subject to NRA withholding, but may be subject to Form 1099 reporting and backup withholding.

Form W-8

Generally, a foreign person that is a beneficial owner of the income should give you (the Withholding Agent) a Form W-8.

There are various forms in the W-8 series. The form to use depends on the type of certification being made. As used in this discussion, the term Form W-8 refers to the appropriate document. See Forms for Foreign Beneficial Owners for more details.

The following describe the specific types of documentation.

If certain requirements are met, the foreign person can give you documentary evidence, rather than a Form W-8.

Other documentation

Other documentation may be required to claim an exemption from, or a reduced rate of, withholding on pay for personal services. The nonresident alien individual may have to give you a Form W-4, Employee's Withholding Allowance Certificate or a Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual. These forms are discussed in Pay for Personal Services Performed.

Special rules apply to Forms for Foreign Beneficial Owners.

Refer to Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for more information on these forms and documentary evidence.

References/Related topics

Reporting of beneficial ownership information

You may be required to report certain information on your beneficial owners to the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN). Certain types of corporations, limited liability companies, and other similar entities created in or registered to do business in the United States must report information about their beneficial owners—the persons who ultimately own or control the company, to FinCEN beginning on January 1, 2024.

Questions such as will my company be required to report beneficial ownership information to FinCEN, who is a beneficial owner, and when do I need to report my company's beneficial ownership information are found on FinCEN's website.

FinCEN's BOI pages provide:

Contact FinCEN for more information and questions regarding BOI. Do not contact the IRS regarding BOI; all inquiries must be directed to FinCEN.