Filling out the W-8BEN and W-8BEN-E forms is a very important step for businesses and individuals, as the amount of taxation depends on the correctness of the form.
Who submits Form W-8BEN
Form W-8BEN is filed by foreign individuals who receive certain types of income in the United States. Such income can be in the form of dividends, royalties, payments for services rendered, etc., and is taxed at 30%. By submitting Form W-8BEN, a person is entitled to a reduced rate or exemption from taxation if the United States and the country where the person is located have an income tax treaty.
Who submits Form W-8BEN-E
Form W-8BEN-E is similar to Form W-8BEN, but the only difference is that it is filed by legal entities, not individuals.
What documents are required from you?
Below is a list of the documents required to understand which article of the double taxation convention can be applied and which tax is payable if necessary:
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Full registration data and/or documents of the company or sole proprietorship
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Templates of contracts and invoices for an American company. These documents are needed to make it clear what the payments are for.
What is included in the cost of filling out the W-8BEN and W-8BEN-E
What is included in the price—the procedure for filling out:
- Your tax residency.
- Your declaration obligations (payment of taxes to the United States following the convention for the avoidance of double taxation between the country of residence of your company and the United States).
Example: you have a Ukrainian company—we analyze the convention for the avoidance of double taxation between Ukraine and the United States.
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In the form, we indicate the article to which we refer in the convention (which should regulate whether you pay tax, a certain percentage of tax, or nothing).
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In the form, we specify which tax you should pay or not pay according to the convention.
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We analyze the definition of the service provided by your company and draw a parallel with the list of services under the convention (how this service is taxed or not taxed in the United States and the country of your tax residence). Then we write down all this information into the form.
How to fill out W-8BEN
Filling out the W-8ECI form
The need to fill out this form is quite rare. It is usually required by AirBnb hosts.
Generally, you must provide Form W-8ECI if you:
(1) are not a U.S. citizen; and (2) the U.S. rental income is connected to a U.S. trade or business under U.S. tax rules; and (3) you file a U.S. tax return.
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