What Forms Do Foreign Individuals and Entities Need to Complete When Investing in The United States?

foreign investments

Miami is home to many foreign individuals and foreign companies that do business in Florida and all over the United States. As such it is imperative that these foreign persons and companies be aware of the necessary documentation that needs to be filed for U.S. income tax purposes. Forms W-8BEN and W-8BEN-E must be filled out in order to claim treaty benefits and reduce the amount of any required withholding requirements.

Who Needs To Fill Out These Forms?

  • W-8BEN must be filled out by foreign persons received U.S. source income
  • W-8BEN-E must be filled out by foreign entities receiving U.S. source income

What Is The Purpose Of These Forms?

The W-8BEN is filled out by foreign person for the purpose of establishing status. If a foreign person receives certain types of income, they must provide Form W-8BEN to establish they are not a U.S. person, to claim any tax treaty benefits, and to claim that they are the beneficial owner of the income for which Form W-8BEN is being provided. With this form, many of the foreign nationals doing business in Miami or anywhere in Florida can minimize their U.S. tax burden on money earned in the state. Foreign individuals are ordinarily subject to a tax rate of 30 percent on specific types of income they receive from U.S. payers, including:

  • Interest;
  • Dividends;
  • Rents;
  • Royalties;
  • Premiums;
  • Annuities; and
  • Compensation for services rendered.

Form W-8BEN-E is used to establish status by foreign entities. This form is important for foreign entities because it allows them to claim U.S. tax exemptions from U.S. source income. Typically, under the U.S. tax regulations, there is a mandatory 30 percent withholding requirement on any company conducting business in the U.S. and making payments to a foreign entity. The W-8BEN-E is a way around this 30 percent withholding, but it is dependent on whether the foreign entity’s home country has a tax treaty with the U.S.

The tax liability on U.S. source income for foreign individuals and entities is substantial; accordingly, it is important to fill out these forms to potentially avoid this tax withholding. These documents are essential to save money through tax treaty benefits and it is important the information is correct and accurate. Therefore, it is recommended to contact an attorney specialized in tax law to solve any issues or concerns regarding these forms.

How do I submit these forms?

Foreign individuals or entities receiving U.S. source income should fill out the form that pertains to them and submit the form to the party that requested it, typically the one distributing the income to the foreign individual or entity. These forms should be completed before the first payment is made. Additionally, both Forms W-8BEN and W-8BEN-E expire 3 years after the end of the calendar year the respective form was signed.

EPGD Business Law is located in beautiful Coral Gables, West Palm Beach and historic Washington D.C. Call us at (786) 837-6787, or contact us through the website to schedule a consultation.

*Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns. Contacting us through our website does not establish an attorney-client relationship.*

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Eric Gros-Dubois

Eric P. Gros-Dubois founded EPGD Business Law in 2013 and is the current head of the firm’s corporate, estate planning, and tax practice, and manages the firm’s Washington D.C. office. With a JD and MBA, and a specialization in finance, Eric is able to step back and view the legal world through a commercial lens while also acting as a trusted business advisor for his clients. He does his best to be solutions oriented, and tries to think like a business owner, not just a lawyer.


*The following comments are not intended to be treated as legal advice. The answer to your question is limited to the basic facts presented. Additional details may heavily alter our assessment and change the answer provided. For a more thorough review of your question please contact our office for a consultation.

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