IRS Tax Forms and Retroactive Statements
Foreign vendors complete IRS W-8 form (W-8BEN, W-8ECI, W-8EXP, or W-8IMY) (and retroactive statement if an existing vendor). A brief summary of the purpose of each of the Forms W-8 is provided below with links to the form and its instructions:
*The retroactive statement applies to existing vendors only.
Form W-8BEN (Certification of Foreign Status of Beneficial Owner for Unites States Tax Withholding) is the most common Form W-8. It is for foreign vendors to provide their identifying information in Part I and to certify in Part IV that they are not U.S. taxpayers. The Form W-8BEN is also used to exempt certain types of payments from the 30% federal income tax withholding required under U.S. tax law (see Part II). For a valid tax treaty exemption, the recipient must provide a U.S. tax identification number. Form W-8BEN cannot be used by partnerships. See Form W-8IMY.
Form W-8ECI (Certification of Foreign Person's Claim that Income is Effectively Connected with the Conduct of a Trade or Business in the U.S.) is for exemption from withholding on income effectively connected with a trade or business in the United States. The form stipulates that the foreign entity files yearly U.S. tax returns and pays U.S. income tax on all income claimed to be effectively connected with a U.S. trade or business. In order for the form to be completed properly, a U.S. tax identification number must be provided.
Form W-8EXP (Certification of Foreign Government or Other Foreign Organization for United States Tax Withholding) is used by foreign tax-exempt organizations to claim and document their tax-exempt status under U.S. tax law. To claim exemption from U.S. tax withholding, foreign tax-exempt organizations must provide documentation of their U.S. tax-exempt status. Foreign entities that cannot establish their U.S. tax-exempt status will be subject to 30% U.S. federal income tax withholding from their payments.
Form W-8IMY (Certification of Foreign Inermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for U.S. Tax Withholding) is used for reporting payments to "flow-through entities" such as foreign partnerships or trusts. Completion of a Form W-8IMY will also require the completion of Forms W-8BEN for the partners or beneficiaries.
Form 8233 (Exemption from Withholding on Compensation for Independent [and Certain Dependant] Personal Services of a Nonresident Alien individual) is used by individual vendors who are eligible for tax treaty benefits to claim exemption from U.S. federal tax withholding.