W-8 Form

Posted on by user

W-8 Forms: What They Are and Which One You Need

Overview

W-8 forms are IRS certificates used by non-U.S. persons and foreign entities to establish foreign status for U.S. tax withholding. These forms are provided to payers or withholding agents (not filed with the IRS) to claim reduced withholding or exemption under U.S. tax law or income tax treaties. Without a valid W-8 on file, payers typically withhold tax at the full 30% rate on certain U.S.-source payments.

Who must file

File a W-8 form if you are a foreign individual or foreign entity (nonresident alien, foreign corporation, foreign nonprofit, etc.) that receives U.S.-source income such as interest, dividends, rents, royalties, annuities, or compensation for services. U.S. citizens and resident aliens use Form W-9 instead and should not use W-8 forms.

Validity and filing basics

  • A completed W-8 is given to the payer or withholding agent; it is not submitted to the IRS.
  • Each W-8 is effective for the year signed and the next three full calendar years.
  • Provide the correct W-8 before the first payment to avoid default 30% withholding.
  • Forms request basic identification (name, address, TIN) and details about the payment source; they can be complex — consider professional help if needed.

Which W-8 form to use

There are five W-8 forms. Choose based on whether you are an individual or an entity, the type of income, and whether you act as an intermediary or flow-through entity.

W-8BEN — for foreign individuals

Used by non-U.S. individuals who are the beneficial owners of U.S.-source nonbusiness income (interest, dividends, royalties, rents, annuities, and certain compensation). It establishes foreign status and permits claim of reduced withholding under an applicable income tax treaty.

Example: A nonresident who receives dividends from U.S. stocks can submit W-8BEN to claim a treaty rate lower than 30%.

W-8BEN-E — for foreign entities

Used by foreign corporations, partnerships, and other entities receiving U.S.-source nonbusiness income. It documents entity status, treaty eligibility, and any claim for reduced withholding.

W-8ECI — for income effectively connected with a U.S. trade or business

Used when income is effectively connected with conducting a trade or business in the United States (ECI). ECI is taxed on a net basis at graduated rates (after allowable deductions), not subject to the flat 30% withholding that applies to certain nonbusiness income.

Key points:
* You generally must have engaged in U.S. trade or business during the tax year for income to qualify as ECI.
* Passive trading of securities or commodities through a U.S. broker typically does not create ECI.

W-8EXP — for foreign governments and certain tax-exempt organizations

Used by foreign governments, international organizations, foreign central banks, and foreign tax-exempt entities (including some foundations) to claim exemption or reduction from withholding under specified tax-code provisions.

W-8IMY — for intermediaries and flow-through entities

Used by foreign intermediaries, qualified intermediaries (QIs), foreign flow-through entities, or certain U.S. branches that receive withholdable payments on behalf of others. W-8IMY documents intermediary status and often requires accompanying withholding statements or documentary evidence.

Common questions

  • Who needs Form W-8BEN?
    Non-U.S. individuals who are the beneficial owners of U.S.-source income and wish to claim foreign status or treaty benefits.

  • Where do I send a W-8?
    Return the completed form to the payer or withholding agent who requested it. Do not file it with the IRS.

  • Why is W-8BEN-E required for businesses?
    Foreign entities are also subject to withholding on certain U.S.-source payments; W-8BEN-E documents entity status and any treaty-based reductions or exemptions.

Practical tips

  • Submit the appropriate W-8 before payments begin to avoid backup or full statutory withholding.
  • Keep copies and track expiration dates (valid through December 31 of the third calendar year after signing).
  • If your circumstances change (e.g., you become a U.S. resident), update or stop using the W-8 and provide a Form W-9 if required.
  • Complex situations (partnership allocations, treaty interpretations, intermediary documentation) often require tax professional advice.

Bottom line

W-8 forms let non-U.S. persons and entities document foreign status and claim reduced or exempt withholding on U.S.-source income. Selecting the correct form depends on who you are (individual vs. entity), the income type, and whether you act as an intermediary. Provide the correct form to the payer or withholding agent and renew it as needed to avoid default 30% withholding.