This article gives a general overview of the key differences between the W-8BEN and W-8BEN-E tax forms, and which document you need to file.
For more details, please see Guide To Form W-8BEN (US)
Should I file W-8BEN or W-8BEN-E?
Form W-8 is for non-US citizens or businesses to verify their country of residence for tax purposes.
Filling out a W-8 can mean avoiding a 30% withholding tax on US income.
Whether you need to file W-8BEN or W-8BEN-E depends on whether you are an entity or an individual.
If you need additional assistance with the W-8BEN, contact us 24/7 and we’ll be happy to help you!
You should file W-8BEN if you are:
An independent contractor
A sole proprietor
For example, file W-8BEN if you are:
Still not sure? Please search for your country in our list made specifically for contractors. If your entity type is on this list, you should file a W-8BEN.
You should file W-8BEN-E in case you are:
- An entity
- A company
- An organization
- A trust
For example, file W-8BEN-E if you are:
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 that best describes your entity structure.
Corporation: A corporation is a recognized legal entity separate from its owners. Owners are issued stock. The owners are not liable personally for the corporation's debts.
Disregarded entity: A disregarded entity is a legal entity separate from its owner but elects to be treated as part of its owner for US tax purposes.
Partnership: A partnership is the relationship between two or more persons who join to carry on a business together.
Simple Trust: A simple 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 its income must be distributed currently, and none of its income may be devoted to charity.
Grantor Trust: 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.
Complex Trust: A complex trust is any trust that is not a simple trust or a grantor trust.
Estate: An estate holds the assets of a deceased person until distribution to the heirs.
Government: A non-U.S. governmental entity not engaged in a commercial-financial activity—for example, the Ministry of Finance, Embassy, or a Consulate.
Central Bank of Issue: A central bank is an institution in a country that issues the currency.
Tax-Exempt Organization: A tax-exempt organization is an entity that is exempt from tax under the Internal Revenue Code.
Private Foundation: A private foundation is a legal entity set up only for specific charitable purposes.
International Organization: An International or supranational organization is an organization whose income does not benefit private persons. For example, the 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 US 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. Examples include restaurants, retailers, etc.
If the entity does not qualify for Active NFFE status, it must be classified as a Passive NFFE. Generally speaking, passive income is the portion of gross income consisting of dividends, interest, annuities, rents, and royalties, and other passive types of income that are not derived in the active conduct of trade or business.
If you are interested in knowing more about IRS forms W-8BEN & W-8BEN-E, we suggest you look at our comprehensive guide about them. Please check IRS's websites to find official instructions: W-8BEN and W-8BEN-E.