The IRS released the Instructions for Form W-8BEN-E, Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities). The IRS released the final version of Form W-8BEN-E in March 2014.
Form W-8BEN-E is intended to be completed exclusively by non-U.S. entities that certify their status as beneficial owners of income payments. Similar to Form W-8BEN, which was previously used by entities to certify foreign status, Form W-8BEN-E allows a payee or account holder to certify its entity status for chapter 3 purposes and its eligibility for any treaty benefits. The primary difference between the prior version of Form W-8BEN and the new Form W-8BEN-E is that Form W-8BEN-E also allows a payee or account holder to identify its FATCA status (under chapter 4) and make the requisite certifications relevant to that status. While Form W-8BEN-E may be used immediately, the IRS has indicated that the use of this form by non-U.S. entities claiming beneficial owner status does not become mandatory until 1 January 2015.
The Instructions for Form W-8BEN-E provide line-by-line details, as well as definitions of FATCA and chapter 3 terms. In addition to the line-by-line details, the instructions provide overview information regarding when payees or account holders may complete the form and when parts of the form are not required to be completed. Examples:
Lastly, the final instructions also offer specific guidance to foreign financial institutions (FFIs) in jurisdictions with Intergovernmental Agreements (IGAs), disregarded entities, or branches completing the Form W-8BEN-E, including direction regarding the completion of Part II (Lines 11-13).
The industry had hoped that the form instructions would provide further assistance to entities filling out the form regarding which FATCA status they should select. Unfortunately, the instructions merely provide cross references to the Treasury Regulations when discussing the various FATCA entity classifications, as well as specific definitions within those classifications (e.g., the definition of “passive income”). Thus, the instructions provide less guidance than the face of the forms. It is unlikely that the persons completing the form will have ready access to the cross referenced rules and, if even they did, would not likely understand how to navigate through them. This, coupled with the fact that English is not likely to be the primary language for the majority of persons completing the form, is likely to result in substantial confusion for account holders, especially in the initial years.
On a positive note, the instructions do make clear that the person completing the form does not need to complete the FATCA classification boxes and certifications during the pre-existing obligation transition period, as well as for excludable non-financial payments and other payments that are excepted from the definition of a withholdable payment.
Form W-8BEN-E can be accessed by clicking here: http://www.irs.gov/pub/irs-pdf/fw8bene.pdf (PDF, 315 KB)
The Instructions to Form W-8BEN-E can be accessed by clicking here: http://www.irs.gov/pub/irs-pdf/iw8bene.pdf (PDF, 225 KB)
The IRS has also posted updated versions of the following forms relating to withholding and reporting requirements, reflecting updated information relating to chapter 3 (withholding of tax on nonresident aliens and foreign corporations) and chapter 4 (the FATCA regime):
The newly updated versions of these four forms include a note that a withholding agent can accept the prior version of the form (i.e., the 2006 version) through the end of 2014. This is an update to Treasury regulations which provide that the new forms must be used six months after the revision date (1 September for the Form W-BEN-E and W-8ECI and 1 November for the other two forms).
The IRS had informally stated that it would allow such treatment, and the updated forms apparently are intended to provide a greater degree of comfort for withholding agents and foreign financial institutions (FFIs). The language included in the notes on page one of each form makes clear that the 2006 version of the form obtained between now and the end 2014 will be valid for the normal validity period for purposes of chapter 3 and until the end of the transition period for purposes of chapter 4—i.e., 31 December 2014, for a “prima facia FFI” (relevant only for U.S. withholding agents and PFFIs operating under the FFI Agreement) and 30 June 2016, for all other entities.