On June 25, 2014, the Internal Revenue Service released the instructions for Form W-8BEN-E, Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities). Form W-8BEN-E, which was issued without instructions in March 2014 (with a February 2014 revision date), is used by non-US entities to document their status as a payee under Chapter 4 and as a beneficial owner under Chapter 3 of the Internal Revenue Code. In addition, Form W-8BEN-E is used by non-US entities to document their entitlement to a reduced rate of withholding pursuant to an income tax treaty. An entity that does not document its Chapter 4 status (commonly referred to as its FATCA status) may be treated as a recalcitrant account holder or nonparticipating foreign financial institution, and subject to a 30% withholding when receiving certain withholdable payments.
The instructions to Form W-8BEN-E provide clarification and relevant definitions in regard to the requirements for documenting and certifying a non-US entity’s status, which is essential for compliance with FATCA and other information reporting and withholding requirements. Although a withholding agent or payer may still accept the pre-FATCA version of Form W-8BEN, Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting, (i.e., the Feb. 2006 revision of Form W-8BEN) from an entity until December 31, 2014, it is expected that many payees will begin using the new Form W-8BEN-E immediately, now that the instructions to the form have been released.