Form W-8BEN is issued by the US Internal Revenue Service and must be completed by foreign individuals who receive US-source income such as dividends, interest, royalties, compensation for services, or other fixed or determinable annual or periodic income. By filing the form, the individual certifies their non-US tax residency and, where applicable, claims a reduced withholding rate under an applicable US tax treaty.
Without a valid W-8BEN on file, the US payer is required to withhold 30 per cent of qualifying payments before remittance. Where a tax treaty exists between the US and the payee's country of residence, the withholding rate can be reduced -- often to 0 to 15 per cent depending on income type. The form is generally valid for three calendar years from the year it is signed.
For HR and payroll teams engaging non-US contractors or paying foreign employees in a cross-border capacity, collecting and validating W-8BEN forms is a standard compliance step. Dutch professionals receiving US-source income can benefit from the Netherlands-US Tax Treaty, which may reduce withholding to 0 per cent on certain categories of income. The corporate equivalent of the W-8BEN is the W-8BEN-E, used by foreign entities.