Form W-8BEN is issued by IRS to non-US citizens or non-US persons. This form is used to report financial information and to allow the federal government to compute tax liability due to them on the basis of the financial information given.
The purpose of W-8 BEN is to determine a person’s non-American status. The person also claims that he or she is the beneficial owner of the revenue declared in the same form. This form enables the foreign beneficial owner to claim tax exemptions or tax reduction on the withholding tax on the basis of the income tax treaty between the US government and the beneficial owner’s country. Furthermore, the individual can also claim tax exemptions from non-service payments like dividends, interest, royalties and rents from external sources.
Category: Tax exemptions, Tax return information. Form W-8 BEN is submitted to the IRS by foreign individuals who receive “non-service payments” in the form of trusts, royalties and the like. These foreign persons apply for tax exemption because of their eligibility to avail of the tax treaty in their country. Form W-8 BEN is filed together with Form 8233 by foreign persons for tax exemption purposes. Unlike Form W-7 which is typically used to obtain an ITIN by a taxpayer who is ineligible to claim SSN, W-8 BEN can be used to validate the foreign status of a non-US citizen who lives outside the United States.
Link to IRS website: http://www.irs.gov/pub/irs-pdf/fw8ben.pdf