Form W-8BEN should be used by foreign vendors in the following situations:
- Establishing Foreign Status: To establish that they are not U.S. persons for U.S. tax purposes.
- Claiming Beneficial Ownership: To claim that they are the beneficial owners of the income for which the form is being provided.
- Claiming Treaty Benefits: To claim a reduced rate of, or exemption from, withholding under an income tax treaty between their country of residence and the United States.
- Exception from Backup Withholding: To claim an exception from domestic information reporting and backup withholding for certain types of income that are not subject to foreign-person withholding at a rate of 30% under section 1441. This includes:
- Broker proceeds
- Short-term (183 days or less) original issue discount (OID)
- Bank deposit interest
- Foreign source interest, dividends, rents, or royalties
- Proceeds from a wager placed by a nonresident alien individual in certain games
- Amounts of U.S. source gross transportation income that are taxable under section 887(a)
- Documenting Foreign Status for FATCA: To establish their chapter 4 status as a foreign person for purposes of the Foreign Account Tax Compliance Act (FATCA).
Foreign vendors must provide Form W-8BEN to the withholding agent or payer before income is paid or credited to them to avoid withholding at the foreign-person withholding rate of 30% or the backup withholding rate under section 3406.
Sources:
Publication 515 (2024)
Publication 519 (2023)
Instructions for Form W-8BEN (10/2021)
Instructions for Form W-8BEN-E (10/2021)
Instructions for the Requester of Forms W-8BEN, W-8BEN-E, W-8ECI, W-8EXP, and W-8IMY (06/2022)
Instructions for Forms 8804, 8805, and 8813 (11/2022)
Instructions for Form W-8ECI (10/2021)
