Explanation of Form W-8BEN

Are you a foreigner receiving income or dividends from the United States? Then you will surely have been asked to complete the Form W-8BEN. This IRS document is not a simple procedure: it can save you a lot of money in taxes and prevent them from withholding more than necessary.

In this guide, I explain What is it, what is it for, who should fill it out and how to do it step by step.

El Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting) It is an official document of the IRS (United States Internal Revenue Service).

👉 Its main function is to:

1. Prove that a person is a foreigner (not resident in the U.S. UU.).
2. Allow the application of tax benefits from international treaties between the U.S. Department of State and the taxpayer's country.
3. Avoid higher withholding taxes in income from a U.S. source (such as stock dividends, royalties, interest, etc.).

In a nutshell:

If you invest in U.S. stocks In the United States, you receive dividends or generate income from that country, this form is used to Reduce tax withholding, as long as your country has a tax treaty with the United States.

For example:

• Without the W-8BEN, the withholding can be 30% about dividends.
• With the W-8BEN, if your country has a treaty, you can go down to a 10% or 15% (depending on the agreement).

What is Form W-8BEN?

The W-8BEN is a foreign status certificate that the IRS requires individuals not resident in the U.S. UU. who receive income from that country.

• W-8BEN = for natural persons (individuals).
• W-8BEN-E = for entities (companies).

Who should fill it out?

• Foreign investors who buy U.S. stocks or ETFs UU. and they receive dividends.
• People who receive royalties, interest or payments from the U.S. UU.
• Any non-tax resident in the U.S. Department of State that wants to apply a double taxation treaty.

Example:

If you live in Colombia and have Apple shares, the dividends you receive will be subject to withholding. The W-8BEN certifies that you are Colombian and that your country has a treaty with the U.S. In the United States, so retention is low.

What is the W-8BEN for?

✅ Avoid being automatically held on 30% of your income in the U.S. UU.

✅ Allows you to apply the international tax treaties (example: Colombia, Mexico, Spain, Chile, etc.).

✅ Ensure that you correctly report your condition of non-resident alien.

✅ It makes it easy for brokers, banks or payers in the U.S. U.S. states process your income lawfully.

Validity and renewal

• Form W-8BEN is valid for 3 years from the date of signing.
• It must be renewed if you change your country, tax status or when it expires.

Consequences of not filing

If you don't give the W-8BEN to your broker or financial institution:

• It will apply to you the maximum retention of 30% on all U.S. source income.
• You won't be able to claim the benefits of the treaty later.

Form W-8BEN is key for any foreigner who invests or receives income from the United States. Filling it out correctly not only saves you from problems with the IRS, but it can mean significant savings in taxes.

In a nutshell:

➡️ If you invest in the U.S. UU. , The W-8BEN is your pass to pay less taxes and to do so in a legal and transparent manner.