What is the W-8BEN-E Form

The W-8BEN-E form, also referred to as “Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities), refers to the IRS form used by foreign entities receiving income from the US. It serves two specific purposes: 

• Establish foreign status 
• Claim any applicable tax treaty benefits

Not everyone needs to file this particular form, but those who do need to understand how it works, how to file it, and specific pitfalls to watch out for when filing. 

The following article discusses all three, in addition to advice for business owners looking for simpler workarounds. 

Who needs the W-8BEN-E Form?

There are several instances in which a W-8BEN-E form applies:

#	Category
1	Foreign entities receiving US-source payments are subject to Chapter 3 withholding
2	Foreign partners in a partnership subject to Section 1446
3	Foreign entities maintaining an account with a Foreign Financial Institution (FFI)
4	Foreign entities (other than partnerships or trusts) selling a life insurance contract under Section 6050Y(b)
5	Foreign entities receiving reportable death benefits under Section 6050Y(b)
6	Recipients of “portfolio interest” who claim the Section 881(c) exemption
7	Foreign payees claiming an exception from domestic information reporting (Form 1099) or backup withholding (Section 3406)

Conversely, there is a large group of people for whom the W-8BEN-E does NOT apply. The following table lists these groups as well as the correct form for each:

Group	Correct Form
Nonresident alien individual	W-8BEN
Parties receiving income connected with a United States business	W-8ECI
US Person (including citizens, resident aliens, corporations)	W-9
Foreign insurance company
Foreign branch of an FFI US financial institution
Foreign government	W-8EXP
International organization
Foreign central bank of issue
Foreign tax-exempt organization
foreign private foundation
Government of a US possession claiming the applicability of section 115(2), 501(c), 892, 895, or 1443(b
Intermediaries, qualified intermediaries, or qualified securities lenders	W-8IMY
Foreign reverse hybrid entity claiming treaty benefits on behalf of interest holders
Withholding foreign partnership, Withholding foreign trust under sections 1141-1143
Foreign Partnership, Foreign Grantor Trust, providing documentation for under section 1146(a)
Foreign Partnership, Greign Grantor Trust acting as transferor of a partnership interest under section 1146(a)

What is the W-8BEN-E Form for?

Under sections 1441 and 1442, foreign persons are subject to US tax at a 30% rate on income they receive from US sources. 

The IRS has a wide definition of income, which includes payments in the form of: 

IRS Income Types

Payment Type	Example(s)	Can Claim Treaty Reduction?	Notes
Interest	Bank interest, corporate bond coupon payments	Yes	can be 0 % if under IRC § 881(c) and properly documented.
Original Issue Discount (OID)	US Treasury bill with ≤ 183 days to maturity	Yes	Can be exempt from withholding if W-8BEN-E is provided.
Dividends	Dividends from US corporations	Yes	Many treaties reduce dividend withholding to 15 % or even 5 %/0 %.
Rents	Rent on US real estate or equipment leases	Yes	If the income is effectively connected (ECI), different rules apply (use W-8ECI instead).
Royalties	Copyright royalties for US book sales, patents	Yes	Royalties on US IP usually face 30 % unless a treaty lowers it (often to 10-0 %).
Premiums	Insurance premiums for a US–issued policy	Yes	Almost always subject to Chapter 3 unless ECI.
Annuities	Periodic insurance/ retirement payments	Yes	Treaty rates vary by country; some treaties exempt annuities altogether.
Compensation for Services	Consulting fees for work performed in the US	Yes	Services performed outside the US are generally not considered US-source income.
Substitute Payments in Securities Lending	Cash-in-lieu payments when securities are lent	Yes	These payments are treated similarly to interest.
Pensions and Other Deferred Payments	US employer pension distributions to a foreigner	Yes	If the payor treats it as FDAP, W-8BEN-E can reduce withholding under a treaty.
Scholarships/ Fellowships	Scholarship conditioned on US study/work	Yes	Scholarship amounts may be zero-rated under certain treaties or tax-exempt status.
Certain Broker Proceeds	Sale of US stock, even if you aren’t a US person	Varies	Pays to foreign brokers and foreign persons; W-8BEN-E certifies foreign status
Short-term OID	US corporate bonds with maturity ≤ 183 days	Yes	See “Original Issue Discount (OID)” above.
US Sourced Bank Deposit Interest	Interest from a US savings account	Yes	Some treaties exempt bank interest altogether (e.g., Canada-US treaty).
Foreign-source items requiring certification	Foreign-source interest/dividends	N/A	Typically have a 24 % backup withholding.

Form W-8BEN-E provides foreign companies the ability to claim an exemption to this tax under the basis of existing trade treaties or trade agreements. 

Depending on the form of income, the form W-8BEN-E can reduce the payment anywhere down to 0%. 

When filing a W-8BEN-E, keep the following details in mind: 

• 3-year expiration: Once you file a W-8BEN-E, it is good for the remainder of that year plus the next three following years. For example, filing in September 2024 would make it valid until January 2028, at which point it would need to be filed again. 
• Not filed with the IRS: a W-8BEN-E form is filed with a US payer or withholding agent – most often, this is the American business paying for the service, but it can sometimes be a third-party. It is not submitted to the IRS except in the event of an audit.

Technological solutions for managing the W-8BEN-E Form

Foreign entities wanting to submit the W-8BEN-E form have a few options: 

Method	Pros	Cons	Best For
Manual Distribution	Zero Cost	Requires manual tracking	One-off exchanges or very small operations with one or two foreign vendors
	Ensures Up-to-Date Version	No assistance when filling out
Doc Management/ E-Signature	Automated reminders	Fees (Subscription, per-transaction)	Businesses with an in-house global HR rep for easy management
	Digital audit trail	Takes time to set up
Tax Compliance Software	ERP integrations	Requires subscription	Enterprise-level company seeking ERP features
	Bulk reminders	May cause payee confusion
Global Payroll Provider	Easy onboarding	Platform Fees	Companies expanding their workforce internationally with regular recurring payments
	Seamless with payouts	Requires country-specific coverage

Most often, global payroll providers make for the most effective choice when businesses expand internationally due to the relative level of automation. 

Simpler forms of distribution, like manual or e-signatures, can be more direct, but require significantly more investment in labor to ensure that forms are being filled out correctly and turned in before the first payment is delivered.

Want to simplify managing contractor forms? 

Expanding your business across borders isn’t easy, but what is? The W-8BEN-E form – as it can be simplified with the right tools. 

Whether it’s onboarding new employees, contractors, or foreign entities, working with a global payment provider helps business owners stay compliant when moving across borders. 

Payoneer Workforce Management provides you with the guidance and the tools to seamlessly pay international contractors.

Book a demo.

FAQs

1. Who needs to complete a W-8BEN-E Form?

The W-8BEN-E form is completed by foreign entities (such as corporations, partnerships, or nonprofits) to certify their non-US status and claim any applicable tax treaty benefits. It’s typically requested by the US companies making payments to these foreign entities so they can properly report the income to the IRS.

2. What is the W8BEN Form used for?

The W-8BEN form is used by non-US individuals to certify their foreign status and claim a reduced rate of withholding tax under an income tax treaty. It’s provided to a US company or financial institution to avoid or reduce US tax withholding on payments like interest, dividends, or independent contractor income.

3. Why did I receive a W-8 BEN Form from my bank?

You likely received a W-8BEN form from your bank because you’re a non-US person with a US financial account. Banks are required by US tax law to document the tax status of account holders, especially if they may be subject to US tax withholding or reporting. The form helps the bank report correctly to the IRS.

4. How does the IRS know if you have a foreign bank account?

The IRS can find out about foreign bank accounts through international reporting laws. Under FATCA, many foreign banks report US account holders directly to the IRS. US individuals must also file FBAR if their total foreign account balance exceeds $10,000 at any point in the year. The IRS also receives information through tax treaties and global data-sharing agreements with other governments.