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, then 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 on their own, 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 IRS tread mill continues. I am sure everyone will be surprised to learn it is now even more complex.
Edit 3 (2019). The IRS has made the form even more confusing (again) so I have updated the instructions (again). My thanks to the IRS for making this post evergreen.
Edit 4 (2021). The IRS has made the form even longer. I have updated the instructions again – it looks like this post is never going to die.
Edit 5 (2023). A small clean-up of this post since it remains popular. I am starting to get a warm fuzzy feeling about the IRS.
Step 1. Get the W-8BEN-E form
Download the W-8BEN-E form from the IRS website. If the form has moved then just google for it – the IRS seems to like to move the forms around on their website fairly regularly just to keep things interesting for all of us.
Print out the form as I find it easier to fill it in by hand and scan, but if you have a pdf editor then that is a good alternative.
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 on 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. Only tick “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 the “Foreign TIN” write in your company’s ABN.
Edit. Technically, your company’s tax file number is the TIN, but some sources have suggested that you supply your ABN, not TFN (others say TFN). I am much happier to supply people with my company’s ABN rather than TFN. I suspect in the end it doesn’t 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 a company’s income.
Question 10. Leave blank.
That is the easy first two pages taken care of! Now to Part III (you can skip Part II).
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 (all the tax 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 completing this form for 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 where you put the month first then the day. The IRS cares about this sort of thing!
Tick the box that says that you have the capacity to sign (assuming that 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 after which time you are going to have to go through the whole form filling process again.
/s Now wasn’t that simple! Thank you IRS for making this form so easy and providing such clear and simple to follow instructions for us all. /s