What Is a W-8BEN Form?

Companies can unlock new growth opportunities by expanding their global workforce. In fact, 81% of leaders are already actively engaged in global recruitment. With the support of a best-in-class Employer of Record (EOR) like G-P, you can quickly and compliantly hire, onboard, and manage global teams, regardless of entity status.

However, working with international employees can also mean your company is responsible for withholding all relevant taxes required by each foreign country’s tax laws in a calendar year. Since income tax rates vary depending on the employee’s country of residence, companies in the U.S. filling out a W-8BEN form for international hires may find the process challenging if they’re unprepared.

What is a Form W-8BEN?

A form W-8BEN is an Internal Revenue Service (IRS) tax form used by non-U.S. tax residents or non-resident aliens to certify their foreign status and ensure the correct withholding rate is applied to income from U.S. sources. Form W-8BEN stands for the Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals).

Non-U.S. tax residents — including employees and global contractors — providing services to U.S. companies are generally required to complete Form W-8BEN and submit it to the hiring company.

What is Form W-8BEN used for?

For companies hiring internationally, Form W-8BEN verifies an individual’s foreign status and determines their eligibility for tax exemptions or reduced withholding under a tax treaty. It also identifies individuals subject to a 30% tax on different U.S.-sourced types of income, including fixed and periodic (FDAP) payments such as:

1. Interest.
2. Royalties.
3. Annuities.
4. Rent.
5. Premiums.
6. Compensation for services.
7. Substitute payments, if applicable.

The purpose of W-8BEN forms is to determine whether individuals are legally considered U.S. persons — residents or citizens — and to establish ownership of the income referenced in the form. Form W-8BEN also allows individuals from countries outside of the U.S. with tax treaties to claim reduced withholding rates on U.S.-sourced income.

What are tax treaties?

A tax treaty is an agreement between two countries that determines how income earned by residents of one country is taxed by the other country. According to the IRS website, if a country has a tax treaty with the U.S., residents of that country may be eligible for tax reductions or exemptions on income earned in the U.S.

For example, since Canada and the U.S. have a tax treaty, if a U.S. company hires an employee in Canada, they can claim benefits as a non-resident alien (NRA) when filing their taxes. Individuals living in countries without a tax treaty are required to pay income tax at the standard rates, without reductions.

Income tax treaties don’t apply to dual residency situations — when individuals are legal residents of more than one country. However, dual residents may still be eligible to receive some tax treaty benefits, depending on their location.

Countries With a Tax Treaty With the U.S.
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 Korea Kyrgyzstan Latvia Lithuania Luxembourg Malta Mexico Moldova Morocco The Netherlands New Zealand Norway Pakistan	The Philippines Poland Portugal Romania Russia Slovak Republic Slovenia South Africa Spain Sri Lanka Sweden Switzerland Tajikistan Thailand Trinidad Tunisia Türkiye Turkmenistan Ukraine United Kingdom Uzbekistan Venezuela

Tax treaties can change over time. For employers hiring internationally, it’s crucial to stay informed about evolving laws in their target country. AI-powered tools like G-P Gia™ — G-P’s AI-based global HR compliance advisor — can provide expert guidance on global employment laws in 50 countries and all 50 U.S. states, reducing the cost and time of compliance by up to 95%.

Who provides the W-8BEN form?

International employees and global contractors must provide Form W-8BEN to their U.S. employers, usually during the onboarding process. According to the Internal Revenue Service (IRS), employees must give Form W-8BEN to the withholding agent or payer if they are a non-resident alien who is the beneficial owner of an amount subject to withholding.

They should submit Form W-8 BEN when requested by the withholding agent whether or not they are claiming a reduced rate of, or exemption from, withholding. For example, a W8BEN can be completed and provided to the grantor’s withholding agent or equity administrator.

Companies must collect and verify the accuracy and legitimacy of the forms they receive. However, the W-8 form can still be valid even with minor errors. For example, if the date is missing from the signature, the employer can add the date upon receipt and consider it valid from that point forward.

Who needs to fill out form W-8BEN?

Form W-8BEN is typically completed by non-resident aliens (NRAs). Companies hiring internationally should receive this form from international employees or global contractors if they meet any of the following criteria:

1. They are non-U.S. citizens or residents (NRA).
2. They work for a U.S. company or earn U.S.-sourced income.
3. They claim tax treaty benefits or reduced withholding.
4. They earn fixed or periodic income from the U.S.

Who is responsible for withholding the income tax?

Companies paying income to non-U.S. tax resident, known as U.S. withholding agents, are responsible for withholding taxes at the source before paying the individual. Failure to properly withhold may result in noncompliance penalties or fines. If multiple withholding agents are involved, the tax only needs to be withheld once from the owners of the income.

If the employer is withholding income tax on behalf of the individual, do not send the form to the IRS upon receipt. Instead, they should securely store the form in their records for as long as necessary to determine their liability.

How to fill out Form W-8BEN

When filling out Form W-8BEN, instructions are straightforward and included within the form itself. To complete the form, the international employee or global contractor should include the following information:

1. Their legal name
2. Their birthdate, written in the mm-dd-yyyy format
3. Their country of citizenship
4. Their permanent residence address in their company’s resident country
5. Their mailing address if it’s different from the company’s permanent address
6. Their social security number (SSN) or Individual Tax Identification Number (ITIN), including their International TIN, if applicable
7. The name of their resident country for the purposes of that country’s income tax, if applicable
8. All relevant financial information, including income and previous payment amounts from older tax returns.

Are there other W-8 forms?

Yes, the IRS has several W-8 forms, each applicable to different types of non-U.S. tax-withholding scenarios. In addition to the W-8BEN, other relevant tax documentation includes:

• Form W-8BEN-E for non-U.S. entities or international entities, instead of individuals.
• Form W-8IMY for individuals or entities receiving withholdable payments from a non-U.S. resident or citizen or flow-through entity.
• Form W-8EXP for beneficial owners who want to claim an applicable tax reduction or exemption, including non-U.S. governments and tax-exempt organizations.
• Form W-8ECI for individuals or entities claiming exemption from withholding on income effectively connected with the conduct of a trade or business in the U.S., including those earning income from U.S. business activities.

Forms W-8 vs. Forms W-9: What’s the difference?

While W-8 forms apply to non-U.S. tax residents or citizens and entities earning U.S.-based income, W-9 forms apply to companies, contractors, and similar entities operating under U.S. law, including U.S. citizens and residents. These forms are considered informational form submissions and don’t expire like W-8 forms.

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