How to complete the W-8BEN-E Form for Australian Companies

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The IRS seems to be over just making the life of Americans a misery and they have decided the whole world should experience their special attention. If you are a foreign business with no presence in the USA, but you have US customers, you need to complete and provide your customers with a copy of the W-8BEN-E Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities).

This form is eight long pages of IRSese with such easy to understand terms as “Nonparticipating FFI (including a limited FFI or an FFI related to a Reporting IGA FFI other than a registered deemed-compliant FFI or participating FFI)”. If anyone know what this means please post, because nobody at the IRS seems to know – at least nobody who answers the phones.

When faced with completing this form for the first time it is near impossible to know what you need to fill in and the IRS instructions are as clear as mud. To save other poor Australians the nightmare of completing the W-8BEN-E form here is my step-by-step guide for standard Australian companies (i.e. those owned and run by Australians) of what you need to do.*

*Disclaimer. I am not a USA tax lawyer or accountant! Use this guide as a starting point for knowing what you need to do and always consult a professional. Do not use these instructions if you are a US citizen or have a US company branch.

Edit (2016). The IRS updated their form in 2016 so I have updated the instructions. Amazingly they have made the form even more complicated – there really is no form too complicated that the IRS can’t make it worse.

Edit 2 (2017). Once again the IRS has updated the form in 2017 and so the tread mill continues. I am sure everyone will be surprised to learn it is even more complex.

Edit 3 (2019). The IRS has made the form even more confusing again so I have updated the instructions. Thanks to the IRS for making this post evergreen.

Step 1. Get the W-8BEN-E form
1. You can download the W-8BEN-E from the IRS website. If the form has moved then just google for it – the IRS seems to like to move forms around on their website fairly regularly.
2. Print out the form as it is easier to fill it in by hand and scan.

Step 2. Complete Part I
Question 1. Write your full business name (eg. “xyz pty ltd”)
Question 2. Write “Australia”
Question 3. Leave blank
Question 4. Tick “Corporation”. Don’t tick the “yes” or “no” box for the line “If you entered disregarded entity, partnership, simple trust, or grantor trust above, is the entity a hybrid making a treaty claim? If “Yes” complete Part III.”
Question 5. Tick only “Active NFFE. Complete Part XXV”
Question 6. Write your registered business address in Australia
Question 7. Write your mailing address in Australia. If it is the same as 6. then just write “As Above”.
Question 8. Leave blank
Question 9a. Leave blank
Question 9b. For “Foreign TIN” write in your company’s ABN.
Edit. Technically, your company’s tax file number is the TIN, but some sources suggest that you supply your ABN, not TFN (others say TFN). I am much happier to supply people with my ABN rather than TFN. I suspect in the end it does not matter too much since the ATO has the ability to crossmatch your ABN and TFN – the whole point of this form is for the IRS and ATO to share data on company income.
Question 10. Leave blank.

That is the easy page 1 taken care of! Now to page 2.

Step 2. Complete Part III
Question 14a. Tick the check box and write “Australia”.
Question 14b. Tick the check box “The beneficial owner derives the item (or items) of income for which the treaty benefits are claimed, and, if applicable, meets the requirements of the treaty provision dealing with limitation on benefits. The following are types of limitation on benefits provisions that may be included in an applicable tax treaty (check only one; see instructions):”
On the 14b. sub-question choose: “Company with an item of income that meets active trade or business test”. This is assuming most of your business activity is in Australia.
Question 14c. Leave blank
Question 15. Write “Article 7, Paragraph 1” for the claiming provisions line; “Zero” for the % rate; and “Business Profit” for the type of income line. For the explanation write “Australian entity with no US permanent establishment deriving business profit not subject to withholding tax under the USA-Australian tax treaty. Skip to page 7.
Edit. For non-Australian companies you should be able to find the corresponding article number for your country’s tax treaty with the USA (the treaties are all listed on the IRS website). You will need to read through your tax treaty to find the right article to use (look for the article concerning “business profit”). For example, in the UK-USA tax treaty the article number is the same as Australia’s (Article 7).

Step 3. Complete Part XXV
Question 39. Tick the check box (assuming the three points are true which should be the case if you are a standard Australian company).
Skip to page 8.

Step 4. Complete Part XXX
Sign the form, print your name, and write the date with dashes. Don’t forget to use the crazy USA system of putting the month first.
Tick the box that says that you have the capacity to sign (assuming you do).

Step 5. Scan
Scan the document. To keep the size manageable scan it as a B&W document at 200 dpi and save as a pdf file (it should be under 500 KB). You can then email this when you send invoices to your USA customers. The form is supposed to be valid for 3 years.

/s Now wasn’t that simple! Thank you IRS for making this form so easy and providing such clear and simple to follow instructions /s.

237 comments on “How to complete the W-8BEN-E Form for Australian Companies
  1. Hi Daniel, thank you so much for this detailed breakdown – it’s been a huge help.

    As an Australian startup company earning money from a US client, do you know how much tax we’ll have to pay? And I’m assuming with a W8BENE we won’t be taxed in Australia?

  2. Any money you earn from the USA will just be treated like income earned in Australia except you don’t collect GST (export income). I assume like most startups you are running at a loss, so no company tax until you start making a profit.

  3. Daniel,

    Thanks so much.

    I have done these dreaded forms for nearly 10 years (even pre-FATCA) and, though I thought, by now, despite their increasing arcane complexity, I had a handle on it, your article:

    a. reaffirmed where I was right (Active NFFE, Part XXV),
    b. pointed out where I was wrong (not supplying my client’s ABN), and
    c. gave me a clear guide for the lawyers on the client’s side who were saying we should be ticking the box in Part I.5 (for Part XVI).

    Thanks again.

    Confidently moving forward… ;)

    Chris

  4. Dee there is a different form for individuals W-8BEN. You only need to fill in this form if your customer asks for it – technically it is their problem if you don’t supply it. For what it is worth only around 25% of my customers ask me for it.

  5. Thanks a lot. The website Teachable rightly asks to have this W-8BEN-E for filled out and this was a great help in filling it out.

  6. thanks so much. I was so lost with the terminology.

    I actually got a fair bit of it right but the middle section I needed your valuable guidance.

    champion.

  7. I shall never complain about the ATO ever again… The IRS surely knows how to apply a whole new world of hurt. Makes you wonder if the main reason why US companies don’t want to repatriate money to from aboard to the US is because of world of hurt they are in for trying to fill in all the forms.

  8. I was having a mental break down.
    I am a US citizen and NO ONE knows how to fill out this form (not even IRS people) which is new compared to the 2014 version (different Part III). I am dealing with Italian companies and your input helped me out.
    Thank you
    Roberto

  9. I don’t think you need to fill out Part III. Part I line 4 says:

    If you entered disregarded entity, partnership, simple trust, or grantor trust above, is the entity a hybrid making a treaty claim? If “Yes” complete Part III.

    We entered “Corporation”, so no need for Part III.

  10. Very rarely leave website comments. But I owe you a beer for this! Saved a whole lot of pain. This form was required just to claim a Referral Fee on a SAAS.

  11. Mike this is more of the IRS confusion. You still need to complete part III even if you are a company if you want to claim the tax treaty benefit. This line is just telling you that if you are one of these other entities and want to claim the tax benefit you need to complete part III. You can see in part III that company is one of the categories of 14b. The entire purpose of this form is to be able to claim the tax treaty benefits and not have your payments withheld.

    I have to give it to the IRS they have managed to make the form even more confusing.

  12. thanks for the easy guide to a complex form.
    I wonder why we do business with the USA as they treat everyone like a criminal

  13. David, you are a champion!! I have been asked for this as a sole trader, even though it is a tiny amount of money…. Has taken more time than the service supplied!! Going mental until now. Thanks again :- D

  14. Hi Daniel, are the instructions you gave for a company exactly the same for a self managed superannuation fund, I have a few shares in the USA- I do have to fill in a W-8BEB-W i have been told by computershare usa but they cannot help me they say (possibly too complicated for them)

  15. Thank you Daniel, I am so relieved to have stumbled across this information. You’ve sufficiently reduced my stress levels …lol I just have a question, I am involved in an Australian Partnership. In part 1 Q4, do I select “Partnership” and tick “yes” and is there any other sections to the form that I will need to complete a little different to your instructions above?

  16. Hi Daniel,

    Indeed, the IRS probably rates as the most opaque and complex organizations ever conceived by government.

    In your instruction for Section III you have suggested referencing Article 7, Paragraph 1 of the US/AU tax treaty.

    However Article 7 refers specifically refers to interest payments only and not payments for the sale of goods/services. See the extract below in quotes.

    Wondering how you arrived at this conclusion?

    ARTICLE 7
    Article 11 of the Convention is omitted and the following Article is substituted:
    “ARTICLE 11
    Interest
    (1) Interest arising in one of the Contracting States, being interest to which a resident of the
    other Contracting State is beneficially entitled, may be taxed in that other State.

    (5) The term “interest” in this Article means interest from government securities or from
    bonds or debentures (including premiums attaching to such securities, bonds or debentures),
    whether or not secured by mortgage and whether or not carrying a right to participate in profits,
    interest from any other form of indebtedness, as well as income which is subjected to the same
    taxation treatment as income from money lent by the law of the Contracting State in which the
    income arises. Income dealt with in Article 10 (Dividends) and penalty charges for late
    payment shall not be regarded as interest for the purposes of this Article.

  17. Hi Daniel,

    You are correct. I was referring to the “Protocols”, not the actual treaty…

    I would point out though that while Article 7 of the treaty implies 0% withholding tax on “profits”, interest and royalties are subject to Article 11 and Article 12 respectively. Both of these are subject to a maximum rate of 10% withholding under the treaty.

    The reason for pointing this out is that payments for software licences are not “profits” but are treated as a “royalties” by both the IRS and the ATO.

    Therefore a software company in Australia selling software licences to a US entity would need to be careful before filling out Section III claiming “Business Profit” and specifying Section 7 as support.

    We just had a customer withhold the correct current IRS rate for “Royalties” of 5% after we submitted a W-8BEN-E form completed as described in the Morgan Stanley link below which seems to be a more generic and possibly safer way to complete Section III.

    The silver lining in this is that the ATO appears to allow a Foreign Tax Offset for the US withholding tax as described in the second link, albeit with more paperwork.

    https://www.morganstanley.com.au/pub/content/dam/msaustralia/resources/margin-lending-documents-and-forms/guides-to-completing-your-tax-forms/guide-to-completing-w-8ben-forms.pdf

    https://www.ato.gov.au/Forms/Guide-to-foreign-income-tax-offset-rules-2019/?page=1#Overview

  18. This is where is gets complex and it depends on how and what you are selling. The post is only supposed to be general guide and as I advice you really need to get professional advice to check into your specific situation.

    Yes you can claim back any royalties taken out by the IRS or any other countries with which Australia has a double taxation treaty.

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