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Form W-8BEN-E

Has your US client asked you to complete a W-8BEN-E?

-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).

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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.

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