What is Form W-8BEN

W-8BEN is an IRS form that non-US workers or individuals file for tax reporting and withholding purposes.

IRS Form W-8BEN certifies that a foreign individual is:

• a non-US resident
• the beneficial owner of a US-sourced income
• eligible for US withholding tax exemption or reduction

As a US employer, you must file form W-8BEN to hire non-US contractors and remote workers and add them to your payroll.

Disclaimer: This article is for informational purposes only and is not intended as tax advice. IRS regulations can be subject to change, so check for updates on www.irs.gov. Consult an accountant or tax advisor for help with tax laws.

What does form W-8BEN do?

Form W-8BEN protects foreign workers from double taxation and lowers the amount of tax they must pay to the Internal Revenue Services IRS.

Foreign individuals who receive income from a US source are subject to a 30% tax withholding rate on their total income, depending on the type of income.

However, the US has income tax treaties with some countries that prevent individuals who live in those countries but receive income from the US from being taxed in both places.

By filing form W-8BEN, foreign workers can claim non-US resident tax treaty protection and qualify for an exemption or lower tax withholding rate. The form allows them to retain their income and avoid paying the mandatory 30% interest to the IRS.

💡Countries that have a tax treaty with the US include Armenia, Australia, Austria, Azerbaijan, Bangladesh, Barbados, Belarus, Belgium, Bulgaria, Canada, China, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Korea (South), Luxembourg, Malta, Mexico, Moldova, Morocco, Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russia, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Tajikistan, Thailand, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Ukraine, United Kingdom, Uzbekistan, Venezuela. Full list available on IRS website.

How does form W-8BEN impact global and remote hiring?

Filing this IRS form before adding a foreign worker to your payroll fulfills your tax reporting obligations and helps you maintain compliance with local and international labor laws.

It protects your organization from noncompliance penalties and sanctions, allowing you to grow and scale your global team faster and with minimum hassle.

See also: 8 tips to find and hire remote international talent

Free resource: The remote team’s guide to employee compensation strategies

What is the difference between form W-8BEN vs W-8BEN-E?

Form W-8BEN applies to foreign individuals who receive a US-sourced income, while form W-8BEN-E covers the tax withholding obligations of foreign entities.

Like foreign individuals, foreign entities that receive income from a US source are subject to a 30% tax withholding rate. Form W-8BEN-E allows these businesses to claim a tax rate reduction or exemption if their country has a tax treaty with the United States.

See also: W-9 vs 1099 differences for independent contractors [2024]

Who should file form W-8BEN?

Foreign contractors, employees, or individuals who receive income from a US source or employer should file form W-8BEN with their payer or withholding agent.

Items of income subject to this tax obligation include:

• Dividends
• Interests
• Royalties
• Annuities
• Premiums
• Rents
• Compensation for services rendered

If you work for a US employer, you may also need to file form W-8BEN if:

• are not a US citizen
• are not a US resident
• don’t hold a green card
• perform your work outside the US

Who shouldn’t file form W-8BEN?

Don’t file form W-8BEN if you are:

• not an individual (foreign legal entities should file form W-8BEN-E instead)
• a US citizen or resident alien (use form W-9 instead)
• a beneficial owner of income earned from the conduct of trade or business within the US (other than personal services) (use Form W-8ECI instead)
• receiving compensation for personal services performed in the US (use Form 8233 or W-4 instead)
• a covered expatriate subject to different tax rules (use the form W-8 CE instead)
• A trustee of a US foreign trust (file forms W-8BEN-E or W-8IMY instead)

How does filing form W-8BEN benefit global and remote workers?

As a non-US worker, submitting form W-8BEN could exempt you from the 30% tax liability charged by the IRS on US-sourced income or lower your interest rate.

This should allow you to keep more of your earnings and protect you from double taxation, especially if you come from a treaty country.

If you don't fill out this form, your US payer or withholding agent could withhold 30% of your income, which is remitted to the IRS. This amount is difficult to claim if you don't file taxes in the US.

Who issues form W-8BEN?

As a US employer or financial institution responsible for paying a non-US citizen, you, not the IRS, must provide a foreign income recipient with form W-8BEN.

Do this before paying or adding them to your payroll.

💡The IRS updated Form W-8BEN in 2021, incorporating changes to US tax regulations. Use the most current version of the tax withholding certificate to stay compliant.

How do I fill out form W-8BEN?

Only foreign individuals can fill out W-8BEN tax forms.

As a US employer, obtain a W-8BEN form from the IRS website and furnish it to your non-US citizen employee.

As a non-US worker, once you receive the form, fill out the following sections:

Part I: Identification of beneficial owner

This section collects your personal information, including your:

• Name as shown on your official ID, passport, or income tax return
• Country of citizenship: If you have dual citizenship, enter the country where you are both a citizen and currently reside.
• Permanent residence address: This is your residence in the country you pay taxes, not your PO box, in-care-of address, or the address of a financial institution
• Mailing address, if it is different from your permanent residence address
• US Social Security Number (SSN) if you have one. If you don’t, skip to section 6b. If you don’t have an SSN and are not eligible for one, enter your individual taxpayer identification number (ITIN) or foreign tax identification number (foreign TIN)
• Date of birth in the mm-dd-yyyy format, such as 03-25-1981.

Part II: Claim of tax treaty benefits

If you come from or reside in a country with a tax treaty with the US, you may fill this section to claim tax credits, exemptions, or a reduction of the 30% withholding tax.

If not, skip this section.

To fill the section, add your:

• Country of residence
• Treaty exemption claims

Part III: Certification

To finalize the form, declare that all the information you have provided is accurate, correct, and complete to the best of your knowledge.

Sign the form with your full legal name, date, and official signature.

As of 2022, electronic signatures of just your name are not allowable for form W-8BENs.

Foreign individuals filling the form in any tax year must validate their signatures through DocuSign or Adobe Acrobat with the electronic signature validation envelope intact.

How do I fill out form W-8BEN-E?

Form W-8BEN-E is similar to form W-8BEN, except it deals with foreign entities rather than individuals. To fill out this form, enter the following details:

Part I: Identification of beneficial owner

Provide basic entity information, such as:

• Name of organization – Enter the full legal name as in the business registration documents
• Country of incorporation
• Chapter 3 status (entity type)
• Chapter 4 Status (FATCA status)
• Permanent residence address (street, apt. or suite no., or rural route)
• Business mailing address, if different from the business permanent residence address
• US taxpayer identification number (TIN), if applicable
• GIIN and Foreign Tax Identification Number (TIN)

Part II: Disregarded entity or branch receiving payment

Complete this section only if you are a disregarded entity with a GIIN (global intermediary identification number) or a branch of an FFI in a country other than the FFI's country of operation.

Part III: Claim of tax treaty benefits (if applicable)

If the entity is located in a treaty country, fill this section to claim treaty benefits.

Add any special rates and conditions that apply to your case. If you are claiming an exemption, for instance, note the article and paragraph of the treaty that makes you exempt. Explain the conditions you meet that make you eligible for the tax reduction or exemption.

In Part IV to Part XXIX, state all the applicable elements regarding foreign financial institutions with a tax treaty with the United States.

To finalize the form, read and make the required declarations and certifications.

Where is my ITIN?

Your individual tax identifying number (ITIN) is usually indicated on your ID or passport, depending on where you live. If you can't find it, contact your country's taxing authority to inquire. You can also apply for an ITIN by filing a W-7 form with the IRS.

Alternatively, fill out the Explanation of Missing Foreign Tax Identifying Number form with the IRs and attach it to your W-8BEN.

Your W-8BEN form is incomplete without this document, your ITIN, or your foreign TIN.

Should I send form W-8BEN to the IRS?

No. As a non-US employee, once you complete your form, submit it to the entity that issued it. This is usually the person providing your income, such as your US employer.

What is the 2021 W-8BEN update?

In October 2021, the IRS published a new version of the W-8BEN form to comply with changes in US tax regulations. The new form features updated instructions on:

• Third-party filing (allowed with power of attorney)
• Disclosure options for foreign individuals in countries that don’t require a TIN (check box 6b on the W-8BEN form)
• Electronic signatures

How long is form W-8BEN valid?

Form W-8BEN is valid for three years from the date of filing, ending on the last day of the third calendar year. For example, if a foreign worker fills out the form on February 23, 2024, it is valid until December 31, 2026.

If anything you write on the form changes or ceases to be true, such as if you change your address, you must file a new W-8BEN form within 30 days of the change.

Is filing form W-8BEN a compliance issue?

Absolutely. Failing to issue forms W-8BENs to foreign workers before you pay them puts you in tax noncompliance and opens you up to lawsuits and legal penalties.

To avoid all the legal and financial risks of hiring globally, appoint Deel as your employer of record and access top-notch foreign talent.

We handle every aspect of global hiring, from onboarding to payroll, so you can grow your global team without wasting precious time or incurring the legal penalties of noncompliance.

What other W-8 forms can I file?

There are five W-8 forms, each with different uses:

• Form W-8BEN
• Form W-8BEN-E
• Form W-8ECI
• Form W-8EXP
• Form W-8IMY

File W-8BEN forms for non-US citizen workers and independent contractors, such as members of your global team. If an independent contractor is registered as a private limited company, the W-8BEN-E may be more appropriate.

If you are a non-US citizen conducting a business or trade in the US other than personal services, file form W-8ECI to receive payment for your work.

For personal services, file form 8233 or W-4.

If you are a foreign government, private foundation, or other specified group, use form W-8EXP to request a reduction or exemption from tax withholding.

If you are a flow-through entity or intermediary, file form W-8IMY.

Maintain W-8BEN tax and hiring compliance with Deel

Deel’s compliance and EOR hubs help you scale your global team seamlessly and with minimal fuss. If you want to hire global or remote talent, use our automated solutions, like Bubb did, to onboard workers compliantly.

Our onboarding platform automatically collects and files crucial documents like the W-8BEN form, storing them in your Deel dashboard so you can monitor your compliance status.

We also offer EOR services, standing in as your employer of record so you can enjoy all the benefits of foreign talent without the risk of global hiring.

Contact us to learn more, or book a demo to see Deel in action today.