Duration: 3:20
Level: Beginner

The W-8BEN form for individuals is the “driver” or determining document for all non-US persons. It gives the US holder the necessary information to determine your tax status for US taxes.

Study Notes:

The W-8BEN form for individuals is the “driver” or determining document for all non-US persons. It
gives the US holder the necessary information to determine your tax status for US taxes.

What information is there?

• The form contains the obvious information name, permanent and mailing addresses, country of
citizenship. The need for all of these is fairly obvious and is what is required in almost every
country for an account to be opened for documentation for a revenue stream.
• There are a couple of more unusual things required on the form:
o Date of birth
o Foreign tax identifying number or Social number.

Why would these be needed for US tax purposes?

• In 2010 the US Congress enacted the Foreign Account Tax Compliance Act commonly referred to
as FATCA.
o The primary purpose was to “capture” income of US persons earned overseas and from
assets and accounts held overseas to collect the tax due to the US government.
o A secondary offshoot of FATCA was information sharing with other countries. In order
to capture earnings in other countries the US needed to share information about
income of non-US persons here.
• FATCA requires that the US share information with most other countries and they with the US
concerning accounts held by their residents.
• This information sharing is what prompted the addition of DOB and the local tax (or social)
number to the W-8BEN.
• The final piece of information on the W-8BEN is tax treaty eligibility.
• The US has tax treaties with approximately 70 countries.
• Your country of primary residence (tax residence) determines tax treaty eligibility.
• If you reside in a country with a tax treaty with the US then you are eligible for the benefits –
i.e. lower US withholding rates.
• Your permanent address must match your treaty country on form W-8BEN.

If you move, update your W-8BEN form – why?

• Your new country of residence may have lower withholding rates than your previous residency
country. Information sharing – if you do not update your information will continue to go to the
country of your old address and not the new – the old residency country might then look for tax
payments.
• W-8BENs expire.
• They are good until December 31 of the third year after they are signed. Renew them before
they expire as if they lapse, US withholding will be applied to all income.
• If this information is not provided then additional income, such as proceeds from the sale of
investments is subject to withholding.


Join the Discussion

Thank you for engaging with IBKR Campus. If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.

Your email address will not be published. Required fields are marked *

Disclosure: Interactive Brokers

The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Interactive Brokers, its affiliates, or its employees.

Disclosure: Tax-Related Items (Circular 230 Notice)

The information in this material is provided for informational purposes only and does not constitute tax advice and cannot be used by the recipient or any other taxpayer to avoid penalties under any federal, state, local or other tax statutes or regulations, or to resolve any tax issue.