Hiring talent across borders is a game changer for startups, but it comes with a new set of rules, especially around taxes. If you’re paying a foreign individual, you’ll quickly run into a short but crucial document: the IRS Form W-8BEN. The W8-BEN is a U.S. tax form used by foreign individuals to certify their non-U.S. status and to claim a reduced rate of tax withholding under an international tax treaty. Getting this form right is essential for both your company and your international contractors.

This guide breaks down everything you need to know about the w8-ben form. We’ll cover its purpose, who needs to fill it out, and how to do it correctly, so you can manage global payments with confidence.

What is a Form W-8BEN and Why Does it Matter?

The Form W-8BEN, officially called the Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting, serves two primary functions for non U.S. individuals.

First, it certifies that a person is not a U.S. citizen or resident, establishing their foreign status. Second, and most importantly, it allows them to claim a reduced rate of U.S. tax withholding on certain types of income thanks to international tax treaties.

Typically, any U.S. sourced income paid to a foreign person (like dividends, interest, or royalties) is subject to a default 30% withholding tax. By submitting a valid Form W-8BEN, that individual can often lower or completely eliminate this tax if a treaty exists between their country and the U.S. It essentially tells the U.S. payer, “I’m a foreign resident, please apply the lower treaty rate instead of the standard 30%.”

Who Needs to File a Form W-8BEN?

The rule is simple: a w8-ben is for non U.S. individuals who are the beneficial owners of U.S. source income. This includes foreign freelancers, independent contractors, or investors receiving payments from a U.S. company or financial institution.

For example, if your startup hires a software developer from Germany as a contractor, you would ask them to complete a Form W-8BEN. This documents their foreign status and allows them to claim any benefits under the U.S. Germany tax treaty.

W-8BEN vs W-8BEN-E vs W-9: Know the Difference

It’s easy to get these forms mixed up, but using the right one is critical for compliance. If you’re also weighing EOR vs. PEO options, see our Global PEO providers comparison guide.

• Form W-9: This is for U.S. persons (citizens, resident aliens, and domestic entities). It provides their Taxpayer Identification Number (TIN) and certifies they are not subject to the 30% foreign withholding.
• Form W-8BEN: This is for foreign individuals. It establishes their non U.S. status and is used to claim tax treaty benefits.
• Form W-8BEN-E: This is for foreign entities, not individuals. Foreign corporations, partnerships, or trusts use this much more detailed form to certify their status and claim treaty benefits.

In short: W-9 is for U.S. persons, the W8-BEN is for foreign individuals, and W-8BEN-E is for foreign businesses.

How to Get and Complete a Form W-8BEN

The person or company paying you (the withholding agent) will usually provide you with the form. If not, you can always download the latest version of Form W-8BEN directly from the IRS website. The official form and its instructions are available for free as a fillable PDF.

Completing the w8-ben is fairly straightforward. It’s a one page document with three main parts.

Part I: Identification of Beneficial Owner

This section is for personal details. You’ll need to provide:

• Full Name: Your legal name.
• Country of Citizenship: The country where you hold citizenship.
• Permanent Residence Address: This must be a physical address in the country where you are a tax resident, not a P.O. box.
• U.S. Taxpayer Identification Number (TIN): Enter your Social Security Number (SSN) or Individual Taxpayer ID Number (ITIN) if you have one. If not, leave it blank.
• Foreign Tax Identifying Number (FTIN): Enter the tax ID number issued by your home country. If your country doesn’t issue one, you can check a box indicating it’s not legally required.
• Date of Birth: This is required, especially when providing the form to a financial institution.

Part II: Claim of Tax Treaty Benefits

You only need to fill out this part if you live in a country that has an income tax treaty with the U.S. and you want to claim a reduced withholding rate. The U.S. has tax treaties with approximately 65 countries.

• Line 9: Enter the country where you are a tax resident for treaty purposes.
• Line 10: This is for special rates and conditions. For most common income types like dividends or interest, you can leave this blank.

By completing Part II, you are certifying your eligibility for treaty benefits, which can significantly reduce the tax withheld. For instance, many treaties lower the 30% tax on dividends to 15% and often eliminate tax on interest entirely.

Part III: Certification

Finally, read the certification statement, sign, and date the form. An electronic signature is often acceptable if the system meets IRS requirements.

Submitting the Form and How Long It Lasts

Once you’ve completed your Form W-8BEN, what do you do with it?

Submit it to the Payer, Not the IRS

This is a common point of confusion. Do not send the Form W-8BEN to the IRS. You must give it to the withholding agent, which is the U.S. person or company paying you. They keep the form in their records as proof of your foreign status and justification for withholding at a reduced rate. If you don’t provide the form, the payer is required to withhold the full 30% tax.

For U.S. companies hiring globally, collecting and managing these forms is a key compliance step. An integrated platform like Bolto can automate the collection of the correct tax forms during onboarding, ensuring you have the proper documentation for every international payment.

Form W-8BEN Validity and Expiration

A Form W-8BEN does not last forever. It is generally valid from the date it is signed until the last day of the third following calendar year. For example, a form signed on any date in 2025 will remain valid until December 31, 2028.

The form will become invalid sooner if any of your information changes, such as your name, address, or country of residence. If your circumstances change, you must notify the payer and provide a new form within 30 days.

Other Key W-8BEN Considerations

Beyond the basics, a few other factors make the w8-ben an essential tool for cross border payments.

Avoiding Backup Withholding

Submitting a Form W-8BEN also protects you from something called backup withholding. This is a separate 24% tax that can apply to certain payments when a payee’s tax status isn’t properly documented. For income like proceeds from a stock sale or certain types of interest, a valid w8-ben on file proves you are an exempt foreign person, so the 24% backup withholding does not apply.

FATCA Compliance

The Foreign Account Tax Compliance Act (FATCA) requires foreign financial institutions to identify their U.S. account holders. The Form W-8BEN is a key tool for this. By providing it to a foreign bank or broker, you certify your non U.S. status, ensuring your account is classified correctly and avoiding potential FATCA related withholding.

Using the Current Revision of Form W-8BEN

The IRS occasionally updates its forms. The current version of Form W-8BEN is the October 2021 revision. Always use the latest version available on the IRS website to ensure you are meeting current compliance standards.

Managing tax compliance for a global team can feel complex, but it doesn’t have to be a bottleneck. By understanding forms like the w8-ben and using modern tools, you can hire the best talent from anywhere. If you’re looking to streamline your global hiring, onboarding, and payroll, book a demo with Bolto to see how an all in one platform can help.

Frequently Asked Questions about Form W-8BEN

1. What happens if I don’t submit a Form W-8BEN?
If you don’t provide a valid w8-ben, the U.S. payer is required to withhold tax at the default 30% rate on applicable income. You may also be subject to 24% backup withholding on certain payments.

2. Can I sign a W-8BEN electronically?
Yes, the IRS permits electronic signatures on Form W-8BEN, provided the system used meets certain requirements, such as ensuring the signature is tamper proof and properly authenticated.

3. How often do I need to submit a new W-8BEN?
A Form W-8BEN is generally valid for the year it’s signed plus three full calendar years. For example, a form signed in 2025 expires on December 31, 2028. You’ll need to submit a new one before it expires or if your personal information changes.

4. What is the main difference between Form W-8BEN and W-9?
Form W-8BEN is for foreign individuals to certify their non U.S. status, while Form W-9 is for U.S. persons (citizens and residents) to provide their Taxpayer Identification Number.

5. Do I need a U.S. tax ID number to fill out a w8-ben?
Not always. You can often leave the U.S. TIN field blank. However, providing a foreign tax ID number is now required in most cases if you are claiming tax treaty benefits.

6. Is the Form W-8BEN just for taxes on investments?
No. While it’s commonly used for investment income like dividends and interest, it’s also required for other types of U.S. source income paid to foreign individuals, such as royalties or payments to independent contractors for work performed in the U.S.