Page 14 - Withholding Taxes for Foreign Entities

10:50 - 14-Feb-2020
Page 12 of 55
Fileid: … tions/P515/2020/A/XML/Cycle10/source
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
being furnished or a partner in a partner- foundation subject to the 4% tax. See sec- • Represent that, for purposes of section
ship subject to section 1446 withholding; tion 1443 for the withholding required for a 1446, it is an upper-tier foreign partnership
and payment made to such an entity. or a foreign grantor trust and that the form
• If applicable, claim a reduced rate of, or If the government or organization named on is being used to transmit the required doc-
exemption from, Chapter 3 withholding un- the form is a partner in a partnership carrying on umentation. For information on qualifying
der an income tax treaty. a trade or business in the United States, the ef- as an upper-tier foreign partnership, see
Form W-8BEN-E also may be used to claim fectively connected income allocable to the Regulations section 1.1446-5.
that the foreign entity is exempt from Form 1099 partner is subject to withholding under section For purposes of Chapter 4, an intermediary
reporting and backup withholding for income 1446. or flow-through entity that is a participating FFI
that is not subject to Chapter 3 withholding and See also Foreign Governments and Certain or registered deemed-compliant FFI receiving a
is not a withholdable payment. For example, a Other Foreign Organizations, later. withholdable payment may, instead of providing
foreign entity may provide a Form W-8BEN-E to documentation for each payee, provide pooled
a broker to establish that the gross proceeds Foreign Intermediaries allocation information as described under FFI
from the sale of securities are not subject to withholding statement, later.
Form 1099 reporting or backup withholding. and Foreign
An entity payee also may provide a Form Flow-Through Entities FFI withholding statement. An FFI with-
W-8BEN-E to establish that certain income from holding statement must be provided by a partic-
notional principal contracts is not effectively Payments made to a foreign intermediary or for- ipating FFI or registered deemed-compliant FFI
(including a U.S. branch of a participating FFI
connected with the conduct of a U.S. trade or eign flow-through entity that is not a QI that as-
business. In addition, a foreign hybrid entity sumes primary Chapters 3 and 4 withholding re- that is not treated as a U.S. person) that is an
NQI, nonwithholding foreign partnership, non-
claiming treaty benefits on its own behalf should sponsibility, a WP, a WT, or a branch treated as
provide you with a Form W-8BEN-E with re- a U.S. person (see U.S. branches of foreign withholding foreign trust, or a QI that makes an
election to be withheld on for Chapter 4 purpo-
spect to the income for which treaty benefits are banks and foreign insurance companies, ear-
being claimed. In certain cases, a similar lier) are treated as made to the payees on ses (that is, a QI that does not assume Chap-
ter 3 or 4 withholding responsibility), as descri-
agreed form may be associated with the pay- whose behalf the intermediary or entity acts ex-
ment instead of a Form W-8BEN-E. cept when the intermediary or flow-through en- bed next under Qualified Intermediary (QI).
An FFI withholding statement may include
Form W-8ECI. This form is used by a foreign tity is subject to Chapter 4 withholding. See either payee-specific information or pooled in-
Flow-Through Entities and Foreign intermedia-
person to: ries, earlier. The Form W-8IMY provided by a formation. If the withholding statement includes
• Establish foreign status, foreign intermediary or flow-through entity must pooled information, the withholding statement
must indicate the portion of the payment alloca-
• Claim that such person is the beneficial be accompanied by additional information for
owner of the income for which the form is you to be able to reliably associate the payment ble to:
being furnished, and with a payee. The additional information re- • A Chapter 4 withholding rate pool of U.S.
• Claim that the income is effectively con- quired depends on the type of intermediary or payees,
nected with the conduct of a trade or busi- flow-through entity and the extent of the with- • Each class of recalcitrant account holders
ness in the United States. (See Effectively holding responsibilities it assumes. under Regulations section 1.1471-4(d)(6)
or a single pool for a QI, or
Connected Income, later.) • A class of nonparticipating FFIs.
Effectively connected income for which a Form W-8IMY. This form is used by foreign in-
valid Form W-8ECI has been provided is gener- termediaries and foreign flow-through entities, If the withholding statement includes
ally not subject to Chapter 3 withholding or with- as well as certain U.S. branches, to: payee-specific information, it must indicate both
holding under Chapter 4. • Represent that a foreign person is a QI or the portion of the payment allocated to each
If a partner submits this form to a partner- NQI; payee and each payee’s Chapter 4 status.
Any withholding statement provided by an
ship, the income claimed to be effectively con- • Establish the entity’s Chapter 4 status FFI other than an FFI acting as a WP, WT, or QI
nected with the conduct of a U.S. trade or busi- when required for Chapter 4 purposes; with respect to the account also must identify
ness is subject to withholding under section • When applicable, certify that the entity is a each intermediary or flow-through entity that re-
1446. If the partner has made, or will make, an participating FFI, a registered ceives the payment and such entity’s Chapter 4
election under section 871(d) or 882(d), the deemed-compliant FFI, or a QI that may status and GIIN, when applicable.
partner must submit Form W-8ECI, and attach a provide a withholding statement allocating For additional information on the require-
copy of the election, or a statement of intent to a payment to a Chapter 4 withholding rate ments for FFI withholding statements, see Reg-
elect, to the form. pool of U.S. payees; ulations section 1.1471-3(c)(3)(iii)(B)(2).
If the partner's only effectively connec- • Represent, if applicable, that the QI is as- Chapter 4 withholding statement. A
suming primary Chapters 3 and 4 withhold-
! ted income is the income allocated ing responsibility and/or primary Form Chapter 4 withholding statement must be provi-
CAUTION from the partnership and the partner is 1099 reporting and backup withholding re- ded by the following.
not making the election under section 871(d) or sponsibility;
882(d), the partner should provide Form • Represent that a foreign partnership or a • A territory financial institution that does not
agree to be treated as a U.S. person.
W-8BEN or W-8BEN-E to the partnership. foreign simple or grantor trust is a with- • A U.S. branch that is not a U.S. branch of a
holding foreign partnership or a withhold- participating FFI.
Form W-8EXP. This form is used by a foreign ing foreign trust; • An NFFE or certified deemed-compliant
government, international organization, foreign • Represent that a foreign flow-through en- FFI that is an NQI, nonwithholding foreign
central bank of issue, foreign tax-exempt organ- tity is a nonwithholding foreign partnership, partnership, or nonwithholding foreign trust
ization, foreign private foundation, or govern- or a nonwithholding foreign trust; and is not the payee.
ment of a U.S. possession to: • Represent that the provider is a U.S.
• Establish foreign status, branch of a foreign bank or insurance com- A Chapter 4 withholding statement must
• Establish the entity's Chapter 4 status to pany and either is agreeing to be treated contain the following.
the extent required for Chapter 4 purpo- as a U.S. person or is transmitting docu- • The name, address, TIN (if any), entity
ses, mentation of the persons on whose behalf type, and Chapter 4 status of each payee.
• Claim that such person is the beneficial it is acting for the payments; • The amount allocated to each payee.
owner of the income for which the form is • Represent its status as a qualified securi- • A valid withholding certificate or other ap-
being furnished, and ties lender with respect to payments of propriate documentation sufficient to es-
• Claim an exemption from withholding un- U.S. source substitute dividends; tablish the Chapter 4 status of each payee,
der both Chapter 3 and Chapter 4 for such • Represent its status as a QI acting as a
entity or that the entity is a foreign private QDD for certain payments; and

Page 12 Publication 515 (2020)