If you are a non-US person and receive US income such as interest, dividends, and/or annuities from the US, then you will be subject to a 30% withholding tax on the gross amount. If you invest in US-listed shares in an ISA for example, the W-8Ben form can help you slash the withholding tax in half.
What is the W-8Ben Form?
If you invest in US-listed shares, the Internal Revenue Service (IRS) will charge you a 30% withholding tax on any income, such as dividends, that you earn from those shares.
However, if you live in a country that has a double taxation treaty with the US, such as the UK, you can reduce that rate from 30% to 15%.
To take advantage of and avail of this reduced tax rate, you must complete the W-8Ben form.
The W-8BEN form is a Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals). This tax form certifies the country you live in, confirms you are a non-resident of the United States and that you are the beneficiary of the US income.
How Long is the W-8Ben Form Valid For?
The W-8BEN remains valid from the date you sign the form until the last day of the third succeeding calendar year unless there is a change in circumstances which results in any information on the form being inaccurate.
For example, if you signed a W-8BEN form on 30th September 2020, it is still valid and will remain so until 31st December 2023.
Who Do I Submit the W-8Ben Form To?
You submit it to whoever asks you to complete it i.e., the withholding agent or payer. For example, if Fidelity is your broker you will need to complete, sign and submit the form to Fidelity.
Do not submit the W-8Ben form to the Internal Revenue Service (IRS).
What Income is Included?
Non-US persons are subject to a 30% withholding tax on US income including:
- Interest (including certain original issue discount (OID))
- Dividends
- Rents
- Royalties
- Premiums
- Annuities
- Compensation for, or in expectation of, services performed
- Substitute payments in a securities lending transaction or
- Other fixed or determinable annual or periodical gains, profits, or income.
Source: Internal Revenue Service
When Not To Use The W-8Ben Form
Do not use the W-8Ben form if you meet any of the criteria below. You must use the form per column 2 in the table, ‘Form You Must Use’.
| Description – You are…. | Form You Must Use |
| a foreign entity documenting your foreign status, documenting your chapter 4 status, or claiming treaty benefits. | W-8BEN-E |
| a U.S. citizen (even if you reside outside the United States) or other U.S. person (including a resident alien individual). | W-9 |
| acting as a foreign intermediary (that is, acting not for your own account, but for the account of others as an agent, nominee, or custodian). | W-8IMY |
| a nonresident alien individual who claims exemption from withholding on compensation for independent or dependent personal services performed in the United States. | 8233 or Form W-4 |
| receiving income that is effectively connected with the conduct of a trade or business in the United States, unless it is allocable to you through a partnership. If any of the income for which you have provided a Form W-8BEN becomes effectively connected, this is a change in circumstances and Form W-8BEN is no longer valid with respect to such income. You must file Form W-8ECI. | W-8ECI |
| the trustee of a foreign trust. | W-8BEN-E or W-8IMY |
What If My Circumstances Change?
If your circumstances change then you must notify your withholding agent or payer (your broker), where you have your account, within 30 days of the change in circumstances. The change in circumstances renders existing information in your W-8Ben form incorrect.
You must complete, sign and file a new W-8Ben Form or a different form depending on the change in circumstances (see table above).
Example of a change in circumstances
You live in the UK and have been investing in US-listed shares, Coca-Cola (KO) and PepsiCo (PEP), via a taxable fund and share account. Your broker is Hargreaves Lansdown.
You have been receiving quarterly dividends from Coca-Cola and PepsiCo. As you filled out and submitted the W-8BEN form to your broker Hargreaves Lansdown, you have been paying a 15% withholding tax on your US dividends.
However, you got a new job and moved to Ireland on 1 November 2023. This is deemed to be a change of circumstances. You must notify Hargreaves Lansdown that you moved country within 30 days of the move date.
Ireland also has a tax treaty with the US. However, at this point, you need to speak to your tax advisor who will advise you on how to proceed and which form needs to be completed.
How Is Tax On US Dividends Paid?
Dividend withholding tax is paid before you receive the dividend.
For example, if you are expecting a gross dividend of $10, your agent or payer will pay you:
$7 ($10 less 30% withholding tax) W-8Ben form not completed and submitted.
or
$8.50 ($10 less 15% withholding tax) W-8Ben form completed and submitted.
Joint Account
Even if you have a joint account, for example with your spouse, you must both complete, sign and submit the W-8 Ben form.
Do I Need to Complete a W-8Ben Form If I Invest in US Shares in a SIPP?
In short, no. All qualifying US dividends and interest in the SIPP are paid gross with no withholding tax.
What Happens To the W-8Ben Form After I Submit It To My Agent or Payer?
When you submit the completed form to your broker, for example, the broker updates your file and retains the form. The broker holds it for audit purposes.
I Have Provided My Passport To My Broker. Is That Not Enough?
Your passport is used for ID purposes. However, it doesn’t provide information on where you are ordinarily resident. For example, you may hold an Irish passport but live in the United Kingdom.
Can I Transfer the W-8Ben From One Broker to Another?
No. You will need to complete and sign a new W-8Ben form.
How Do I Complete the W-8Ben Form?
The W-8Ben Form is split into 3 parts:
Part 1 Identification of Beneficial Owner, where you provide your name, address, and country of residence.
Part II Claim of Tax Treaty Benefits, you need to complete this to claim the lower rate of withholding tax. You need to state your country of residence and the % withholding tax rate you are claiming.
Part III Certification, where you confirm, by signing and dating the form, that the information you have provided is ‘true, correct, and complete’. You also agree to submit a new form within 30 days if any of the information provided becomes incorrect due to a change of circumstances.
See www.irs.gov/FormW8BEN for the latest information and instructions on how to complete the W-8Ben Form.
In Summary
The W-8BEN form is a tax document that you may need to fill out if you are a non-US person who earns income from US sources.
It is used to certify your foreign status as a non-US person. It also slashes the withholding tax you pay in half if you are ordinarily resident in a country which has a tax treaty with the US.
It’s worth completing and submitting the W-8Ben form as it will save you money by reducing your tax bill. And reducing your tax bill is always a good thing!
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