The W-8BEN is an Internal Revenue Service (IRS) mandated form to collect correct Nonresident Alien (NRA) taxpayer information for individuals for reporting purposes and to document their status for tax reporting purposes.
In addition, the W-8BEN is a required document when making Non-U.S. Source Income payments to a Nonresident Alien (NRA); these are payments when the services performed are (1) performed by a NRA, and (2) are performed outside the United States. For details on Non-U.S. Source Income payments.
Nonresident Aliens are subject to U.S. tax at a 30% rate on income they receive from U.S. sources that consists of:
- Interest (including certain original issue discount (OID))
- Dividends
- Rents
- Royalties
- Premiums
- Annuities
- Compensation for, or in expectation of, services performed
- Substitute payments in a securities lending transaction
- Other fixed or determinable annual or periodical gains, profits, or income
This tax is imposed on the gross amount paid and is generally collected by withholding under section 1441. A payment is considered to have been made whether it is made directly to the beneficial owner or to another person–such as an intermediary, agent, or partnership–for the benefit of the beneficial owner.
A withholding agent or payer of the income may rely on a properly completed W-8BEN to treat a payment associated with the W-8BEN as a payment to a foreign person who beneficially owns the amounts paid. If applicable, the withholding agent may rely on the W-8BEN to apply a reduced rate of, or exemption from, withholding at source also known as a tax treaty benefit.