Has your US client asked you to complete a W-8BEN-E?
How to apply for a TIN?
Foreign Entity - apply on form SS-4 - we can assist you with obtaining this number.
Individuals - apply on form W-7 -please refer to Individual Taxpayer ID Number (ITIN).
-Do you have US source income from a US client and are a non-resident foreign entity? If yes, your US client may request that you complete Form W-8BEN-E before being paid.
The form W-8BEN-E is a U.S. withholding certificate which is held on file by the US payor to ensure they have withheld the correct amount of US tax on any payments made to a non resident entity.
Most US payors will not issue payment, until this form is completed. In some instances, they may also require an EIN (Employer Identification Number).
Is there a tax treaty between your country and the USA?
Tax treaties allow the US payor to reduce the flat 30% tax withholding on non resident entities. If this is available, it needs to be included on the Form W-8BEN-E. However, where there is a physical presence in the USA, or sales people and potentially where a local distribution site is used, the treaty may not apply and the income is classed as effectively connected income (ECI).
A US tax return is required if the income was effectively connected to the conduct of U.S. trade or business (ECI) even if exempt by treaty.