Filling in Form W-8BEN-E for limited companies and LLCs: every line explained

Sooner or later a US customer, a platform or a licensee sends your company an eight-page form with thirty parts: the W-8BEN-E. Without it, the payer may withhold 30 percent on many payments. With the form filled in correctly, the rate from the tax treaty applies instead. This guide follows the form and its instructions in the version the IRS published as of October 2021. It shows which parts a European limited company actually completes, which treaty article it cites, and why a US LLC usually needs a different form.

1What the form is for

The full title is Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities). With it, a foreign company certifies three things to the payer: that it is not a US person, that it is the beneficial owner of the income and, if it claims treaty benefits, that it is resident in a treaty country and meets the treaty's conditions.

The background is in the instructions. Foreign persons pay 30 percent tax on the gross amount of certain US-source income, withheld by the payer: interest, dividends, rents, royalties, premiums, annuities, compensation for services and other fixed or determinable annual or periodical income. This is governed by Chapter 3 of the Internal Revenue Code. Chapter 4, better known as FATCA, also requires the payer to know the FATCA status of every foreign entity it makes such payments to; if it is missing, 30 percent withholding can apply as well.

The form does not go to the IRS. You give it to whoever asks for it, meaning the payer, the platform, the bank or the partnership allocating income to you, and you do so before the payment is made. Each payer generally needs its own form. How the other W-8 forms differ is explained in our overview of the IRS W-8 forms.

2Who files the W-8BEN-E and who doesn't

Under the instructions, every foreign entity that receives a payment subject to withholding, or holds an account with a foreign financial institution that requests the form, must complete it. For a European company, what matters is how US tax law classifies it, not what your home country's law calls it.

The German, Austrian and Swiss AG appear on the list in the Regulations of foreign entities that are always treated as corporations. The GmbH is not on that list but ends up in the same place: a foreign entity whose members all have limited liability is treated by default as an association and therefore as a corporation. A KG, on the other hand, including the GmbH & Co. KG, has at least one partner with unlimited liability and is therefore treated by default as a partnership. Under the instructions, foreign partnerships generally do not file a W-8BEN-E but a W-8IMY together with their partners' forms.

2.1The US LLC

For a US LLC, the W-8BEN-E is almost never the right form. An LLC with several members or a corporate election is an entity formed in the US and therefore a US person; it files a W-9. A single-member LLC is disregarded for tax purposes, so under the instructions its owner completes the form: your company files a W-8BEN-E with its own name on line 1, and you as an individual file a W-8BEN. The fact that the account is in the LLC's name can go on reference line 10. How to set up such a company without living in the US is shown in our guide to forming a US LLC.

If the company itself runs a business in the US and earns income from it, that income calls for a W-8ECI, not the W-8BEN-E. Income received through a US partnership is the exception; for that, the W-8BEN-E still applies. Which returns an LLC itself files with the IRS is covered in our article on US LLC tax returns.

3Part I: the company details

Every entity completes Part I. The table shows the ten lines and what a limited company usually enters. Three lines deserve a closer look.

Line 4 asks for the Chapter 3 status. The instructions require exactly one box and the classification under US law, not under the law of the treaty country. For a limited company, that is Corporation. Only tick Partnership or Disregarded entity if the entity really is classified that way; the next question is then whether it claims treaty benefits for itself as a hybrid entity.

Line 6 asks for the address in the country where the company is tax resident. A PO box, a bank's address or a mail-drop address is not allowed unless it is the company's registered and only address. If you claim treaty benefits, residence is determined under the treaty's rules.

Lines 8 and 9b go together. To claim treaty benefits, the company needs either its US tax number, the EIN, on line 8 or its foreign tax number on line 9b. The foreign number is enough; under the instructions, an EIN is only needed if no foreign number is given. Separately, a US tax number is mandatory if the company is a partner in a US partnership carrying on a business. How to get one is covered in our article on the US tax number.

Line 5 covers FATCA. It has its own section below, because the box you tick on line 5 decides which other part of the form you complete. For a limited company, Part II almost always stays blank: it only applies to a disregarded entity with its own GIIN or a branch of a financial institution in another country.

4Part III: the tax treaty

Part III is where the company claims treaty benefits. It has three lines, and a typical European company usually fills in two of them.

4.1Line 14a: the treaty country

Here you enter the country in which the company is resident within the meaning of the treaty, and the box confirms that residence.

4.2Line 14b: the limitation on benefits clause

The instructions state explicitly that their summary of the tests is not a basis for the final decision. What counts is the wording of the clause in the treaty itself. Line 14c only concerns treaties that entered into force before 1987.

5FATCA status: active or passive NFFE

Line 5 offers more than thirty boxes, most of which concern financial institutions. An ordinary operating company is not a financial institution but an NFFE, a Non-Financial Foreign Entity. For it, only two boxes are almost ever relevant.

Under Part XXV, line 39, Active NFFE means: the company is not a financial institution, less than half of its gross income for the previous year is passive income, and less than half of its assets, measured as a weighted quarterly average, are held to produce passive income. According to the instructions, passive income includes dividends, interest, rents, royalties and annuities. Whether a trading, manufacturing or service business meets the test depends on its own figures: income and assets decide, not the industry.

Passive NFFE is the Part XXVI status for a company that fails the test, typically a pure holding company whose income is mostly dividends. It checks line 40a and then either 40b, if it has no substantial US owners, or 40c; in the second case it lists the name, address and tax number of each substantial US owner in Part XXIX. Under the instructions, a company that could qualify as active may also choose passive status and disclose its owners. Newly formed companies also have the option of Excepted nonfinancial start-up company status with Part XIX, where the date of formation is entered.

6Part XXX: signature, validity, changes

The form must be signed by an authorized representative or officer of the company, such as a director. By checking the box above the signature, they confirm they have the capacity to sign for the company. If an agent signs, the power of attorney or a copy must be attached; Form 2848 can be used for this. The date is written as month, day, year.

Many payers accept the form electronically. Under the instructions, an electronic signature must show that an authorized person signed electronically, for example with a date and time stamp and a corresponding note. Simply typing your name on the line is not an electronic signature.

As a rule, the form is valid from the date of signature until the last day of the third following calendar year, for chapter 3 and chapter 4 alike. If any information changes, such as the address, the classification or the voting share that counts for a dividend rate, the company must notify the payer within 30 days and submit a new form. If income covered by the W-8BEN-E becomes income effectively connected with a US trade or business, the form is no longer valid for that income.

7Common mistakes

Most queries from payers come up in the same places. The form is sent to the IRS instead of the payer. Line 1 shows the brand name instead of the registered name. The company checks Partnership in line 4 because it has shareholders at home, or a US LLC fills in the W-8BEN-E for itself, even though it should provide a W-9 or its owner should complete the form.

In Part III, the box in line 14b is missing, and without it no treaty rate applies. For 5 or 0 percent on dividends, line 15 is missing, or the zero rate is claimed before the twelve months and the 80 percent have been reached. For a treaty claim, both the EIN in line 8 and the foreign tax number in line 9b are missing. And in line 5, a FATCA status is checked without the matching part being completed.

Finally, treaty benefits are claimed for income attributable to a US permanent establishment. That income calls for the W-8ECI, and the company files its own US return. For freelancers and individuals there is a counterpart to this form, the W-8BEN; our guide to the W-8BEN also walks through it line by line.

In short

• The W-8BEN-E is the form for foreign companies. It goes to the payer, not the IRS, and should be in place before the first payment.
• A European limited company checks Corporation in line 4; a US LLC usually does not complete its own W-8BEN-E: either its owner does, or the LLC provides a W-9.
• In Part III, the company claims treaty benefits and, in line 14b, selects the limitation on benefits test it meets; it needs line 15 for special rates such as 5 or 0 percent on dividends.
• For FATCA, it chooses its status, which for an operating business is usually Active NFFE.
• The form is valid until the end of the third calendar year after signing; if anything changes, a new one is due within 30 days.

How we help you

• Withholding taxW-8 forms, withholding and treaty benefits, done right.
• Corporation tax returnForm 1120 and Form 5472 for your US corporation.
• US Tax ConsultationYour US tax question, answered by people who know both sides.