International Tax Blog

The “Certification” on Form W-8BEN For Royalties

If you are an individual who is not a U.S. person (i.e., not a U.S. tax resident or a U.S. citizen) and you receive royalty income from a U.S. payor, the U.S. payor may ask you to fill out Form W-8BEN. If the U.S. payor does not receive the W-8BEN from you, they may be required to withhold a 30% U.S. tax on the gross payments to you. At the bottom of Form W-8BEN, just... Read more →

The “Certification” on Form W-8BEN For Interest

If you are an individual who is not a U.S. person (i.e., not a U.S. tax resident or a U.S. citizen) and you receive interest income from a U.S. resident or U.S. corporation, the U.S. person paying you the interest may ask you to fill out Form W-8BEN. If the U.S. person paying you the interest does not receive the W-8BEN from you, they may be required to withhold a 30% U.S. tax on the... Read more →

The “Certification” on Form W-8BEN For Dividends

If you are an individual who is not a U.S. person (i.e., not a U.S. tax resident or a U.S. citizen) and you receive dividends from a U.S. corporation, the U.S. company (or the brokerage firm where you hold the shares of stock) may ask you to fill out Form W-8BEN. If the U.S. corporation (or brokerage firm) does not receive the W-8BEN from you, they may be required to withhold a 30% U.S. tax... Read more →

The “Certification” on Form W-8BEN For Services

If you are an individual who is not a U.S. person (i.e., not a U.S. tax resident or a U.S. citizen) and you perform services from outside the U.S. for a U.S. customer, the U.S. customer that is paying you may ask you to fill out Form W-8BEN. If the U.S. customer does not receive the W-8BEN from you, they may be required to withhold a 30% U.S. tax on the gross payments to you.... Read more →

Substantiation of Deductions to Foreign Contractors

In general, no Form 1099 is required for payments to foreign contractors for services performed outside the U.S. Sometimes taxpayers get concerned about how to substantiate the deduction if no Form 1099 needs to be issued to the foreign contractor. The simple answer is that you substantiate the deduction the same way you substantiate all other deductions --- by maintaining books and records evidencing how much was paid, why it was paid, and to whom... Read more →

Tax Treaty Limitation on Benefits (“LOB”) & Form W8-BEN-E

Generally, a 30% U.S. withholding tax applies to payments of U.S. sourced income made to foreign persons. If the foreign person qualifies for benefits under an income tax treaty with the U.S., the withholding tax rate may be reduced. In order to qualify for benefits under an income tax treaty, a foreign person must satisfy the limitation on benefits (“LOB”) article of the treaty. LOB provisions are aimed at eliminating treaty shopping. If a foreign... Read more →

New Videos - March 2016

Over the last month we have published videos discussing several of our situational charts along with IRS Form W-8BEN, linked to below. Rev. Rul. 54-105 - Individual Purchase & Sale of Prop. in Foreign Currency Rev. Rul. 70-373 - Deemed Paid Credits After Lower Tier Liq'n Rev. Rul. 72-354 - Sale of Stock to Qualify as a B Reorganization Rev. Rul. 72-197 - Foreign Taxes Paid By Reverse Hybrid Entity IRS Form W-8BEN Rev. Rul.... Read more →

When an Active NFFE Can Be a Passive NFFE

Just over three years ago the IRS released a first draft of Form W-8BEN-E. We had blogged how the draft form was unnecessarily complex because the foreign entity had to certify that it was either an “excepted” non-financial foreign entity (“NFFE”) or a “passive” NFFE. There are various types of excepted NFFEs, including an “active” NFFE. To determine whether a NFFE is active or passive, a complex income statement and balance sheet analysis must be... Read more →

Payments to Foreign Contractor Entities: Form W-8BEN-E

See Below For How to Fill Out BEN-E for Foreign-Performed Services When requesting a Form W-8BEN-E from a foreign entity, most of the form does not need to be completed when the payments are for services performed outside the U.S. U.S. businesses that make payments to foreign contractors for services may be familiar with Form W-8BEN (Rev. February 2006) (the “Old” W-8BEN). In general, the Old W-8BEN allows a foreign individual or entity to certify... Read more →

International PLRs of Note for the 34th week of 2014

Today the IRS published the following Chief Counsel Advice relating to international taxation. CCA 201434021 - A withholding agent made interest payments to two nonresident aliens, A and B, without withholding 30% as required by Code §1441. The withholding agent treated the payments as portfolio interest not subject to withholding, but did not have the required documentation from the payees to support a claim for the portfolio interest. The withholding agent would be liable for... Read more →

FATCA, NFFEs, and Draft W-8BEN-E - Unnecessary Complexity

UPDATE (6/3/15): The unnecessary complexity of the form was removed with the release of the final Form W-8BEN-E. See: When an Active NFFE Can Be a Passive NFFE. UPDATE (9/22/14): For foreign performed services, see: Payments to Foreign Contractor Entities: Form W-8BEN-E. The U.S. Treasury Department recently finalized the FATCA regulations.(FN 1) The bulk of the regulations deal with certain U.S. source payments to foreign financial institutions (“FFIs”). However, the regulations also require a withholding... Read more →

Form 1099 for Payments to Foreign Contractors for Services?

UPDATE - 9/23/14: For payments to foreign ENTITIES, see our blog post Payments to Foreign Entities: Form W-8BEN-E. UPDATE - 7/22/16: For a discussion of substantiating deductions for payments to foreign contractors, see our blog post Substantiation of Deductions to Foreign Contractors. One question that often comes up is how a domestic U.S. business should treat payments to a foreign contractor for services performed outside the U.S. Is a Form 1099 required? Is withholding required?... Read more →