| Instructions for Form W-8BEN |
2006 Tax Year |
This is archived information that pertains only to the 2006 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
A hybrid entity should give Form W-8BEN to a withholding agent only for income for which it is claiming a reduced rate of
withholding under an
income tax treaty. A reverse hybrid entity should give Form W-8BEN to a withholding agent only for income for which no treaty
benefit is being
claimed.
Line 1.
Enter your name. If you are a disregarded entity with a single owner who is a foreign person and you are not claiming
treaty benefits as a hybrid
entity, this form should be completed and signed by your foreign single owner. If the account to which a payment is made or
credited is in the name of
the disregarded entity, the foreign single owner should inform the withholding agent of this fact. This may be done by including
the name and account
number of the disregarded entity on line 8 (reference number) of the form. However, if you are a disregarded entity that is
claiming treaty benefits
as a hybrid entity, this form should be completed and signed by you.
Line 2.
If you are a corporation, enter the country of incorporation. If you are another type of entity, enter the country
under whose laws you are
created, organized, or governed. If you are an individual, enter N/A (for “ not applicable”).
Line 3.
Check the one box that applies. By checking a box, you are representing that you qualify for this classification.
You must check the box that
represents your classification (for example, corporation, partnership, trust, estate, etc.) under U.S. tax principles. Do
not check the box that
describes your status under the law of the treaty country. If you are a partnership or disregarded entity receiving a payment
for which treaty
benefits are being claimed, you must check the “ Partnership” or “ Disregarded entity” box. If you are a sole proprietor, check the
“ Individual” box, not the “ Disregarded entity” box.
Only entities that are tax-exempt under section 501 should check the “ Tax-exempt organization” box. Such organizations should use Form W-8BEN
only if they are claiming a reduced rate of withholding under an income tax treaty or some code exception other than section
501. Use Form W-8EXP if
you are claiming an exemption from withholding under section 501.
Line 4.
Your permanent residence address is the address in the country where you claim to be a resident for purposes of that
country's income tax. If you
are giving Form W-8BEN to claim a reduced rate of withholding under an income tax treaty, you must determine your residency
in the manner required by
the treaty. Do not show the address of a financial institution, a post office box, or an address used solely for mailing purposes.
If you are an
individual who does not have a tax residence in any country, your permanent residence is where you normally reside. If you
are not an individual and
you do not have a tax residence in any country, the permanent residence address is where you maintain your principal office.
Line 5.
Enter your mailing address only if it is different from the address you show on line 4.
Line 6.
If you are an individual, you are generally required to enter your social security number (SSN). To apply for an SSN,
get Form SS-5 from a Social
Security Administration (SSA) office or, if in the United States, you may call the SSA at 1-800-772-1213. Fill in Form SS-5
and return it to the SSA.
If you do not have an SSN and are not eligible to get one, you must get an individual taxpayer identification number
(ITIN). To apply for an ITIN,
file Form W-7 with the IRS. It usually takes 4-6 weeks to get an ITIN.
An ITIN is for tax use only. It does not entitle you to social security benefits or change your employment or immigration
status under U.S. law.
If you are not an individual or you are an individual who is an employer or you are engaged in a U.S. trade or business
as a sole proprietor, you
must enter an employer identification number (EIN). If you do not have an EIN, you should apply for one on Form SS-4, Application
for Employer
Identification Number. If you are a disregarded entity claiming treaty benefits as a hybrid entity, enter your EIN.
A partner in a partnership conducting a trade or business in the United States will likely be allocated effectively
connected taxable income. The
partner is required to file a U.S. federal income tax return and must have a U.S. taxpayer identification number (TIN).
You must provide a U.S. TIN if you are:
-
Claiming an exemption from withholding under section 871(f) for certain annuities received under qualified plans,
-
A foreign grantor trust with 5 or fewer grantors,
-
Claiming benefits under an income tax treaty, or
-
Submitting the form to a partnership that conducts a trade or business in the United States.
However, a U.S. TIN is not required to be shown in order to claim treaty benefits on the following items of income:
-
Dividends and interest from stocks and debt obligations that are actively traded;
-
Dividends from any redeemable security issued by an investment company registered under the Investment Company Act of 1940
(mutual
fund);
-
Dividends, interest, or royalties from units of beneficial interest in a unit investment trust that are (or were upon issuance)
publicly
offered and are registered with the SEC under the Securities Act of 1933; and
-
Income related to loans of any of the above securities.
You may want to obtain and provide a U.S. TIN on Form W-8BEN even though it is not required. A Form W-8BEN containing a U.S.
TIN remains valid for
as long as your status and the information relevant to the certifications you make on the form remain unchanged provided at
least one payment is
reported to you annually on Form 1042-S.
Line 7.
If your country of residence for tax purposes has issued you a tax identifying number, enter it here. For example,
if you are a resident of Canada,
enter your Social Insurance Number.
Line 8.
This line may be used by the filer of Form W-8BEN or by the withholding agent to whom it is provided to include any
referencing information that is
useful to the withholding agent in carrying out its obligations. For example, withholding agents who are required to associate
the Form W-8BEN with a
particular Form W-8IMY may want to use line 8 for a referencing number or code that will make the association clear. A beneficial
owner may use line 8
to include the number of the account for which he or she is providing the form. A foreign single owner of a disregarded entity
may use
line 8 to inform the withholding agent that the account to which a payment is made or credited is in the name of the disregarded
entity (see
instructions for line 1 on page 4).
Line 9a.
Enter the country where you claim to be a resident for income tax treaty purposes. For treaty purposes, a person is
a resident of a treaty country
if the person is a resident of that country under the terms of the treaty.
Line 9b.
If you are claiming benefits under an income tax treaty, you must have a U.S. TIN unless one of the exceptions listed
in the line 6 instructions
above applies.
Line 9c.
An entity (but not an individual) that is claiming a reduced rate of withholding under an income tax treaty must represent
that it:
-
Derives the item of income for which the treaty benefit is claimed, and
-
Meets the limitation on benefits provisions contained in the treaty, if any.
An item of income may be derived by either the entity receiving the item of income or by the interest holders in the
entity or, in certain
circumstances, both. An item of income paid to an entity is considered to be derived by the entity only if the entity is not
fiscally transparent
under the laws of the entity's jurisdiction with respect to the item of income. An item of income paid to an entity shall
be considered to be derived
by the interest holder in the entity only if:
-
The interest holder is not fiscally transparent in its jurisdiction with respect to the item of income, and
-
The entity is considered to be fiscally transparent under the laws of the interest holder's jurisdiction with respect to the
item of income.
An item of income paid directly to a type of entity specifically identified in a treaty as a resident of a treaty jurisdiction
is treated as derived
by a resident of that treaty jurisdiction.
If an entity is claiming treaty benefits on its own behalf, it should complete Form W-8BEN. If an interest holder
in an entity that is considered
fiscally transparent in the interest holder's jurisdiction is claiming a treaty benefit, the interest holder should complete
Form W-8BEN on its own
behalf and the fiscally transparent entity should associate the interest holder's Form W-8BEN with a Form W-8IMY completed
by the entity.
An income tax treaty may not apply to reduce the amount of any tax on an item of income received by an entity that is treated
as a domestic
corporation for U.S. tax purposes. Therefore, neither the domestic corporation nor its shareholders are entitled to the benefits
of a reduction of
U.S. income tax on an item of income received from U.S. sources by the corporation.
To determine whether an entity meets the limitation on benefits provisions of a treaty, you must consult the specific
provisions or articles under
the treaties. Income tax treaties are available on the IRS website at
www.irs.gov.
If you are an entity that derives the income as a resident of a treaty country, you may check this box if the applicable income
tax treaty does not
contain a “ limitation on benefits” provision.
Line 9d.
If you are a foreign corporation claiming treaty benefits under an income tax treaty that entered into force before
January 1, 1987 (and has not
been renegotiated) on (a) U.S. source dividends paid to you by another foreign corporation or (b) U.S. source interest paid
to you by a U.S. trade or
business of another foreign corporation, you must generally be a “ qualified resident” of a treaty country. See section 884 for the definition of
interest paid by a U.S. trade or business of a foreign corporation (“ branch interest”) and other applicable rules.
In general, a foreign corporation is a qualified resident of a country if any of the following apply.
-
It meets a 50% ownership and base erosion test.
-
It is primarily and regularly traded on an established securities market in its country of residence or the United States.
-
It carries on an active trade or business in its country of residence.
-
It gets a ruling from the IRS that it is a qualified resident.
See Regulations section 1.884-5 for the requirements that must be met to satisfy each of these tests.
If you are claiming treaty benefits under an income tax treaty entered into force after December 31, 1986, do not check box
9d. Instead, check
box 9c.
Line 9e.
Check this box if you are related to the withholding agent within the meaning of section 267(b) or 707(b) and the
aggregate amount subject to
withholding received during the calendar year will exceed $500,000. Additionally, you must file Form 8833, Treaty-Based Return
Position Disclosure
Under Section 6114 or 7701(b).
Line 10 must be used only if you are claiming treaty benefits that require that you meet conditions not covered by the representations
you make in
lines 9a through 9e. However, this line should always be completed by foreign students and researchers claiming treaty benefits.
See Scholarship
and fellowship grants below for more information.
The following are additional examples of persons who should complete this line.
-
Exempt organizations claiming treaty benefits under the exempt organization articles of the treaties with Canada, Mexico,
Germany, and the
Netherlands.
-
Foreign corporations that are claiming a preferential rate applicable to dividends based on ownership of a specific percentage
of
stock.
-
Persons claiming treaty benefits on royalties if the treaty contains different withholding rates for different types of
royalties.
This line is generally not applicable to claiming treaty benefits under an interest or dividends (other than dividends subject
to a preferential
rate based on ownership) article of a treaty.
Nonresident alien who becomes a resident alien.
Generally, only a nonresident alien individual may use the terms of a tax treaty to reduce or eliminate U.S. tax on
certain types of income.
However, most tax treaties contain a provision known as a “ saving clause.” Exceptions specified in the saving clause may permit an exemption from
tax to continue for certain types of income even after the recipient has otherwise become a U.S. resident alien for tax purposes.
The individual must
use Form W-9 to claim the tax treaty benefit. See the instructions for Form W-9 for more information. Also see Nonresident alien student or
researcher who becomes a resident alien later for an example.
Scholarship and fellowship grants.
A nonresident alien student (including a trainee or business apprentice) or researcher who receives noncompensatory
scholarship or fellowship
income may use Form W-8BEN to claim benefits under a tax treaty that apply to reduce or eliminate U.S. tax on such income.
No Form W-8BEN is required
unless a treaty benefit is being claimed. A nonresident alien student or researcher who receives compensatory scholarship
or fellowship income must
use Form 8233 to claim any benefits of a tax treaty that apply to that income. The student or researcher must use Form W-4
for any part of such income
for which he or she is not claiming a tax treaty withholding exemption. Do not use Form W-8BEN for compensatory scholarship
or fellowship income. See
Compensation for Dependent Personal Services in the Instructions for Form 8233.
If you are a nonresident alien individual who received noncompensatory scholarship or fellowship income and personal services
income (including
compensatory scholarship or fellowship income) from the same withholding agent, you may use Form 8233 to claim a tax treaty
withholding exemption for
part or all of both types of income.
Completing lines 4 and 9a.
Most tax treaties that contain an article exempting scholarship or fellowship grant income from taxation require that
the recipient be a resident
of the other treaty country at the time of, or immediately prior to, entry into the United States. Thus, a student or researcher
may claim the
exemption even if he or she no longer has a permanent address in the other treaty country after entry into the United States.
If this is the case, you
may provide a U.S. address on line 4 and still be eligible for the exemption if all other conditions required by the tax treaty
are met. You must also
identify on line 9a the tax treaty country of which you were a resident at the time of, or immediately prior to, your entry
into the United States.
Completing line 10.
You must complete line 10 if you are a student or researcher claiming an exemption from taxation on your scholarship
or fellowship grant income
under a tax treaty.
Nonresident alien student or researcher who becomes a resident alien.
You must use Form W-9 to claim an exception to a saving clause. See Nonresident alien who becomes a resident alien on this page for a
general explanation of saving clauses and exceptions to them.
Example.
Article 20 of the U.S.-China income tax treaty allows an exemption from tax for scholarship income received by a Chinese student
temporarily
present in the United States. Under U.S. law, this student will become a resident alien for tax purposes if his or her stay
in the United States
exceeds 5 calendar years. However, paragraph 2 of the first protocol to the U.S.-China treaty (dated April 30, 1984) allows
the provisions of Article
20 to continue to apply even after the Chinese student becomes a resident alien of the United States. A Chinese student who
qualifies for this
exception (under paragraph 2 of the first protocol) and is relying on this exception to claim an exemption from tax on his
or her scholarship or
fellowship income would complete Form W-9.
If you check this box, you must provide the withholding agent with the required statement for income from a notional principal
contract that is to
be treated as income not effectively connected with the conduct of a trade or business in the United States. You should update
this statement as often
as necessary. A new Form W-8BEN is not required for each update provided the form otherwise remains valid.
Form W-8BEN must be signed and dated by the beneficial owner of the income, or, if the beneficial owner is not an individual,
by an authorized
representative or officer of the beneficial owner. If Form W-8BEN is completed by an agent acting under a duly authorized
power of attorney, the form
must be accompanied by the power of attorney in proper form or a copy thereof specifically authorizing the agent to represent
the principal in making,
executing, and presenting the form. Form 2848, Power of Attorney and Declaration of Representative, may be used for this purpose.
The agent, as well
as the beneficial owner, may incur liability for the penalties provided for an erroneous, false, or fraudulent form.
Broker transactions or barter exchanges.
Income from transactions with a broker or a barter exchange is subject to reporting rules and backup withholding unless
Form W-8BEN or a substitute
form is filed to notify the broker or barter exchange that you are an exempt foreign person.
You are an exempt foreign person for a calendar year in which:
-
You are a nonresident alien individual or a foreign corporation, partnership, estate, or trust;
-
You are an individual who has not been, and does not plan to be, present in the United States for a total of 183 days or more
during the
calendar year; and
-
You are neither engaged, nor plan to be engaged during the year, in a U.S. trade or business that has effectively connected
gains from
transactions with a broker or barter exchange.
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