What is W-8BEN?

What is W8BEN The W-8 form is a legal US Treasury document required by the Internal Revenue Service (IRS) that allows foreign investors to claim concessional tax treaty benefits, including a reduced rate of withholding tax.


In Summary:

Why do I need to complete the W-8BEN Form?

The US Internal Revenue Service (IRS) requires certain documentation from the ultimate beneficial owner to ensure the appropriate level of tax is withheld in the US for dual-listed securities that derive income in the United States of America (US).

 W-8BEN form can be completed establishing that the investor is not a US person and that they are the beneficial owner of the income received.

 Double Tax Agreement (DTA)

Where an investor is a resident for tax purposes of a country with which the US has negotiated a double tax agreement (DTA), in completing this form, the investor may be able to claim a reduced rate of, or exemption from, US withholding tax (US WHT).

Entity investors that are non-residents for US tax purposes are required to complete a W-8BEN-E form – Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding.

Individual investors who are not US citizens or are non-residents for US tax purposes, are required to complete a W-8BEN form – Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding.

The above investors are subject to a maximum withholding tax rate of 30 per cent on certain income they derive from US sources. Where the requisite form is completed in full by an investor, a withholding tax of 15 per cent may apply for Australian tax residents who derive certain income sourced in the US, in accordance with the Australia/US Double Taxation Agreement (DTA).

Alternatively, where the relevant form is not completed in full or in part, DTA benefits will not apply, resulting in a higher rate of withholding tax for Australian resident investors.

Generally, a current W-8BEN form will remain in effect until 31 December, three years after the date of signing. However, if a change in circumstances makes any information on the form incorrect, a new W-8BEN form (or other appropriate form) must be filed to continue to claim a reduced rate of withholding tax under the DTA.

Source: commsec/macquarie