Uses of Form W-8BEN

Form W-8BEN is a certificate issued by the Internal Revenue Service (IRS), which is a department of the United States Department of Treasury. W-8BEN is a Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding.

W-8BEN is just one of the many United States tax forms used by taxpayers, and tax-exempt organizations, to report financial information to the Internal Revenue Service (IRS). On the basis of the income reported and classified on these forms taxes due to the government of the United States are calculated.

Form W-8BEN is used to:

  • Establish that you are not a U.S. person
  • Claim that you are the beneficial owner of the income for which Form W-8BEN is being submitted
  • Claim a reduced, or zero, withholding as a resident of a foreign country with which the United States has an income tax treaty.

In addition it can be used to claim exception from domestic information reporting and backup withholding for income that is not subject to foreign-person withholding. Income included in this definition:

  • Broker proceeds
  • Original issue discount (OID) of less than 183 days
  • Interest on bank deposits
  • Interest, dividends, rents, and royalties from a foreign source
  • Gambling gains by a nonresident alien individual. Restricted to the games of blackjack, baccarat, craps, roulette, and big-6 wheel

Finally form W-8BEN can also be used to certify that income from a notional principal contract is not effectively connected with the conduct of a trade or business in the United States.

Thus, in summary the W-8BEN form is used by foreign individuals to certify their non-American status. The Internal Revenue Service issued the form, and individuals use it to establish that they are foreign, non-resident aliens or foreign nationals performing work outside the United States. The result of the filing is these individuals can claim tax treaty benefits such as a lower tax withholding from dividends paid by U.S. companies.

If you are investing in real estate, then you need to research and identify:

  • General rules for taxing inbound investments by non-US persons
  • System for taxing operating income from foreign-owned US real estate
  • Regime for taxing dispositions of US real estate by non-US owners
  • Withholding obligations of purchasers of US real estate from non-US sellers
  • Impact of tax treaty network on US taxation of inbound real estate investment
  • Limitations on non-US ownership of US real estate
  • Reporting obligations for non-US owners of US real estate
  • Planning for acquisitions and dispositions of US real estate by non-US persons
  • Estate and gift tax planning for foreign-owned US real estate
  • How is direct foreign investment in US real estate taxed?
  • How is portfolio investment in US real estate taxed?
  • What are the seller’s and buyer’s tax obligations when foreign-owned US real estate changes hands?
  • What planning techniques are available to non-US persons for holding and disposing of US real estate?
  • What reporting obligations are associated with foreign ownership of US real estate?
  • Are there limitations on the ability of non-US persons to own US real estate?
  • What impact do tax treaties have on planning for foreign investment in US real estate?
  • What state and local tax issues arise on inbound investment in US real estate?
  • What estate and gift planning should be done for non-US owners of US real estate?

And on top of that you can’t afford not to keep on top of legislative changes, such as: