Should I file W-8BEN or W-8BEN-E?
Form W-8 is a form that non-US citizens or businesses use to verify their country of residence for tax purposes. Filling it out can mean avoiding a 30% withholding tax on their US income.
Whether you need to file W-8BEN or W-8BEN-E depends on whether you are an entity or an individual.
You should file W-8BEN in case you are:
An independent contractor.
A sole proprietor.
For example, file W-8BEN if you are:
Individual entrepreneur in Russia
Auto entrepreneur in France
A sole proprietor (एकल स्वामित्व) in India
A sole trader (Enskild Näringsidkare) in Sweden
Independent Contractor (Autonomo) in Spain
Still not sure? Search for your country in our list specifically made for contractors.
If your entity type is on this list, you should file W-8BEN.
You should file W-8BEN-E in case you are:
An entity or a company.
Organisation or a trust.
For example, file W-8BEN-E if you are:
A limited company (ltd.) from the UK
A private limited company (B.V in the Netherlands
A private limited company (OÜ) in Estonia
A private limited company (ltd.) in Cyprus
Still not sure?
Is your company structured as a limited company, or do you have more than one employee?
In both of these cases, you should file W-8BEN-E.
What entity type should I select?
Select one of the following options, which describes your entity structure.
A corporation is a legal entity that is recognized as separate from its owners.
Owners are issued stock. The owners are not liable personally for the corporation’s debts.
A disregarded entity is a legal entity that is separate from its owner, but
elects to be treated as part of its owner for U.S. tax purposes.
A partnership is the relationship between two or more persons who join to carry on a business together.
A trust is an arrangement under which a trustee holds property for the benefit of one or more persons called beneficiaries. In a simple trust, all of the trust’s income must be distributed currently and none of its income may be devoted to charity.
A grantor trust is a trust in which the individual who creates the trust is the owner of the assets and property for income and estate tax purposes.
A complex trust is any trust that is not a simple trust or a grantor trust
An estate holds the assets of a deceased person until distribution to the heirs.
A non-U.S. governmental entity not engaged in commercial financial activity. For example: Ministry of Finance, Embassy or a Consulate.
Central Bank of Issue:
A central bank is the institution in a country that issues the currency.
A tax exempt organization is an entity that is exempt from tax under the Internal Revenue Code.
A private foundation is a legal entity set up only for certain charitable purposes.
An International or supranational organization where it’s income does not benefit private persons. For example: World Health Organization.
What is my FATCA status for W-8BEN-E?
The Foreign Account Tax Compliance Act (FATCA) generally requires that foreign financial Institutions and certain other non-financial foreign entities report on the foreign assets held by their U.S. account holders or be subject to withholding on withhold-able payments.
To file the W-8BEN-E you must declare whether you are an Active Non-Financial Foreign Entity (NFFE) or Passive Non-Financial Foreign Entity (NFFE).
An Active NFFE is for an entity that has less than 50% of its gross income from the preceding calendar year from passive income and less than 50% of the assets held by the NFFE are assets that produce or are held for the production of passive income.
Less than half of the entity's gross income for the preceding calendar year is passive and less than half of the assets held by the entity produce or are held for the production of passive income. Examples include restaurants, retailers, etc.
If you are interested to know more about IRS forms W-8BEN & W-8BEN-E we suggest you take a look at our comprehensive guide about them.
Disclaimer: This article is for informational purposes only and is not intended as tax advice. IRS regulations can be subject to change, so check for updates on www.irs.gov. Consult an accountant or tax advisor for help with tax laws.