How do I complete the U.S. W-8BEN-E form?

Blog by Fuel Accountants

If you’re a Canadian or Kiwi business and you work with customers in the US it probably won’t be long until someone asks you to complete a version of form W-8. In fact, they all should ask you to complete it, but many don’t know of it’s existence.

The form is part of the wide-reaching U.S. FACTA requirements designed to help detect money-laundering and terrorism financing, but also imposes steep withholding taxes on non-US businesses.  But don’t sweat it – these probably don’t apply to you – if you do things correctly.

To be exempt from this onerous withholding you need to be:

  1. A non-financial entity (such as a bank)
  2. An active business (at least 50% of your revenue comes from non-passive sources – passive includes investing, renting, etc.)
  3. Be incorporated in a country that has a tax treaty with the U.S. (Canada and NZ both do), or (for individuals) reside in such a country
  4. And have a permanent establishment there (and not in the U.S.).
  5. No a US Citizen or Permanent Resident (for individuals) or incoproated in the US (for corporations).

Filling out the form only takes a few minutes.

Corporations need to fill out form W-8BEN-E and individuals (sole proprietors) should use W-8BEN.

Here’s what you need to put on the various fields of form W-8BEN-E:

  • Part I, Question 1: Enter your corporation’s name
  • Part I, Question 2: Enter the country of incorporation (e.g., “Canada”)
  • Part I, Question 4: Check “Corporation” (NZ Look Through Companies should check “Disregarded entity”)
  • Part I, Question 5: Check “Active NFFE. Complete Part XXV”
  • Part I, Question 6: Enter corporation’s address
  • Part I, Question 9b: Enter 9 digit CRA business number or NZ IRD number
  • Part III, Question 14a: Check the box and enter “Canada” or “New Zealand” (as appropriate)
  • Part III, Question 14b: Check the first box beside “The beneficial owner derives…” and also “Company with an item of income that meets active trade or business test”.
  • Part XXV, Question 39: Check to certify that the corporation is an active NFFE.
  • Part XXX: Sign, print name & date form.

You may also need to file a US income tax return along with form 8333 to declare the treaty benefits as non-taxable.

If you’re not incorporated (i.e., a Sole Proprietor/Sole Trader/Individual) then you should be completing form W-8BEN:

  • Part I, questions 1-4: Enter your residential address
  • Part I, question 6: Enter your Social Insurance Number (Canada) or IRD Number (NZ)
  • Part II, question 9: Enter Canada/New Zealand
  • Part II, question 10:
    • If you are self-employed and performing your services OUTSIDE the US, enter “VII.1/XIV”, “0%” and “independent business profits from self employment performed outside the United States” into the fields
    • If you are receiving royalties from the sale of intellectual property, enter “XII.1” and “10%”
    • For interest enter "XI" and 10%
  • Part III: Sign, print name & date form.

As always, your unique circumstances may be different and you should get professional advice.

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