IRS Form W-8BEN vs W-8BEN-E: Which One Do You Need?

W-8BEN is for foreign individuals. W-8BEN-E is for foreign entities, like corporations and partnerships. The form you submit indicates to the U.S. payer how much they should withhold from your payment(s). Using the incorrect form results in delays and may trigger a 30% withholding on all payments made to you.

Non-U.S. founders and freelancers who are paid by a U.S. company, U.S. platform, or U.S. financial institution will need to submit a Form W-8 before they can receive their payment(s). Many international clients we work with get confused by the difference between the IRS Form W-8BEN and the W-8BEN-E. For most of these clients, the confusion is understandable. The results of the confusion, however, are very real.

Both W-8 forms are meant to be kept by the payer or withholding agent and not submitted to the IRS. If a payer does not receive a Form W-8, they must withhold at the maximum tax withholding rate of 30%.

What Is Form W-8BEN and Who Fills It Out

W-8BEN is the Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals).

This form is for foreign persons, contractors, or employees who receive payments from a U.S. source or employer.

Foreign individuals earning Fixed or Determinable Annual or Periodic (FDAP) income from U.S. sources, such as interest, dividends, royalties, rents, or payments for certain types of contractors, must submit Form W-8BEN to the withholding agent prior to payment in order to withhold U.S. income tax.

Form W-8BEN is a four-page form. Part I requires personal information and the country of residence. Part II is the tax treaty benefit claim, and Part III is the signature and certification. As far as IRS forms go, this is a fairly easy one.

What Is Form W-8BEN-E and Who Fills It Out

Form W-8BEN-E adds the “entity” portion to the Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities).

Form W-8BEN-E is the form that foreign entities, such as businesses that have multiple owners, including corporations, partnerships, other organizations, foundations, foreign governments, and international organizations, use to report U.S. tax.

Every foreign entity that receives income from a U.S. business is required to fill out Form W-8BEN-E and submit it to the withholding agent, payer, or foreign financial institution requesting the form. It should not be submitted to the IRS.

Form W-8BEN-E is a ten-page form and may have as many as thirty sections, depending on your entity’s FATCA classification. Most foreign businesses will fall under Part XXV (Active NFFE), but prior to that, you must complete Part I (entity identification), Line 4 (Chapter 3 status, your entity type), and Line 5 (Chapter 4 FATCA status).

Mistakes on the W-8BEN-E include the wrong foreign entity name on Line 1, the wrong status on Lines 3 and 4, and an incorrect or missing TIN.

The Single-Member LLC Problem: W-8BEN or W-8BEN-E?

This is a common issue, especially for foreign nationals when they set up a U.S.-based LLC.

A single-member LLC is a disregarded entity by default, which the IRS treats as tax-transparent. In this case, the non-resident foreign individual is not the single-member LLC but a foreign-owned U.S. disregarded entity, for which W-8BEN is applicable if the foreign-owned U.S. disregarded entity is owned by a non-resident foreign individual who is not a U.S. taxpayer, or W-8BEN-E if the foreign-owned U.S. disregarded entity is owned by a foreign entity.

So, for example, a Brazilian setting up a Wyoming-based LLC would file a Form W-8BEN, not a Form W-8BEN-E, while also claiming beneficial ownership. The LLC name can be entered on Line 3 of the W-8BEN as a disregarded entity, with the certifying party listed as an individual.

A disregarded entity generally does not submit Form W-8BEN-E to a withholding agent. The owner does.

While some people treat the LLC registration as a reason to fill out the entity form, that assumption is incorrect. The form gets rejected by the withholding agent, or the full 30% tax is applied.

W-8BEN vs W-8BEN-E: Side-by-Side Comparison

How to File: Step-by-Step

For W-8BEN:

1. Download the latest version from IRS.gov.
2. Provide your name, country of citizenship, and your physical and mailing addresses.
3. If your country provides a foreign TIN, include that. If you are claiming treaty benefits or the income is from U.S. real estate transactions, a U.S. TIN is required.
4. Complete Part II if your country has a treaty with the U.S. and you are claiming a treaty benefit with a lower withholding rate. Include the article of the treaty and the rate.
5. Sign and date. Submit to the requesting payer, broker, or financial institution. Do not mail it to the IRS.

For W-8BEN-E:

1. Download the latest version from IRS.gov.
2. Line 1: Provide your entity’s name exactly as registered.
3. Line 3: Check the applicable country.
4. Line 4: Check your Chapter 3 entity type. For most foreign operating companies, this will be a corporation or a partnership. The selection should reflect what is accurate under your local law, not what is convenient for a lower rate.
5. Line 5: Check your Chapter 4 FATCA status. Most companies filling out the W-8BEN-E will be Active Non-Financial Foreign Entities (Active NFFEs), unless they are foreign financial institutions.
6. If you have a treaty benefit and have an EIN, include it.
7. Complete the relevant Part (for most Active NFFEs, this will be Part XXV).
8. Sign by an authorized officer or representative. Submit to the payer. Do not send it to the IRS.

Common Mistakes in W-8BEN vs W-8BEN-E

Using the individual form for an entity. A partnership with two foreign partners must not file a single W-8BEN. They must file W-8BEN-E.

Leaving the TIN line empty. When someone is claiming a treaty, a U.S. TIN must be provided. For individuals, this means an ITIN is needed. We assist non-residents with obtaining ITINs on a regular basis.

Choosing the incorrect FATCA status. A business that is an active operating company but selects “Passive NFFE” creates a FATCA compliance flag. Passive NFFE is appropriate for a holding company in which more than 50% of its income is passive. For most operating companies, Active NFFE is the correct classification.

Failure to update the form after a change in circumstances. Changes to a registered address, company name, or EIN all require you to withdraw and resubmit the form. You are also required to resubmit if anything has changed from the circumstances under which you originally submitted the W-8 form.

Submitting an outdated form version. Payers are required to reject outdated versions. Always download the current form directly from IRS.gov on the date you are completing it.

FAQ for W-8BEN vs W-8BEN-E

What is the process for a non-resident who owns a U.S. LLC?

If you are an individual with a single-member LLC, submit W-8BEN with the LLC listed as a disregarded entity. In cases where the LLC is owned by a foreign entity or is multi-member, the LLC files a Form W-8BEN-E.

Is an EIN mandatory to complete the W-8BEN-E?

An EIN is not required to complete the W-8BEN-E. However, if tax treaty benefits are to be claimed, an EIN is necessary. If an EIN is not provided, the treaty claim cannot be processed, and the payer will withhold tax at the full 30% rate.

Can the withholding agent hold my payment until I submit an accurate form?

Yes. If the form submitted is incomplete or incorrect, the U.S. company paying you is required to withhold 30% of the payment and remit it to the IRS. Most payment platforms will hold your payment until a valid form is on file.

How does a tax treaty lower my withholding rate?

A tax treaty between the U.S. and your country of residence can reduce the standard 30% withholding rate for particular income streams, sometimes to 0%, 5%, or 15%. You can claim the tax treaty benefit on Part II of W-8BEN or Part III of W-8BEN-E. You need to reference the applicable treaty article and the rate.

What happens if my country has no tax treaty with the U.S.?

The 30% withholding rate applies to all FDAP income from U.S. sources. You can still file the form to document your foreign status, which prevents backup withholding on non-FDAP income. Active business income not connected to a U.S. trade or business is generally not subject to withholding even without a treaty.

Need an EIN for your treaty claim, or having trouble securing your ITIN as a non-resident founder?

We have solutions for clients in over 175 countries. EasyFiling can assist with EIN and ITIN applications, as well as IRS compliance, for non-U.S. founders of U.S. LLCs and corporations. Get in touch, and we can prepare all the applications so that your payments will not get delayed.