Ross McGill

October 4, 2016|4 Minutes

Time is running out for the 2014 Form W-8BEN-E


Back in April, the IRS issued a revised version of Form W-8BEN-E, which is used by non-US entities to report (among other things) their Identity and IRC Chapter 3 & 4 status to withholding agents. Regulations permit withholding agents to accept prior versions of W-8 forms for a period of six months after the issue date of the new form. This means that from October 31st, withholding agents will no longer be able to accept the 2014 Form W-8BEN-E.

What’s New in the 2016 W-8BEN-E

Perhaps the biggest change to the BEN-E relates to the claim of tax treaty benefits. 10 new checkboxes have been added to Part III requiring the entity to identify which limitations on benefits (LOB) provisions it satisfies. Extensive instructions have been added to the updated Instructions for Form W-8BEN-E (2016) document detailing the LOB provisions.

Part IV and Part XII of the 2016 W-8BEN-E now contain a line for sponsored & sponsoring entities to provide their GIINs. The deadline for sponsored entities to obtain a GIIN is December 31st, 2016, as such the form has been updated to cater for these entities.

In addition to the above, a new Chapter 4 status checkbox has been added to line 5 for “accounts that are not financial accounts”. Also worthy of note, the instructions for how Nonreporting IGA FFIs should document themselves have been revised and can be found in the updated Instructions for Form W-8BEN-E (2016) document

What About Existing W-8BEN-Es?

For withholding agents, the move to a new version of the BEN-E represents a need to update onboarding and validation procedures. Thankfully, entities that have been documented using the 2014 version of the form remain valid for the original period of validity and do not need to be re-documented with the new form.

The inclusion of the LOB statement on the new version of the form does highlight an issue to which some withholding agents may wish to pay special attention. For an entity to claim double tax treaty benefits, they must certify that they meet the requirements of the treaty dealing with the limitation of benefits provisions. Essentially this means that a withholding agent that has accepted previous versions of the W-8BEN-E should have also collected a separate limitation on benefits statement from any entity to which they are offering a reduced rate of withholding. However, in practice, this doesn’t always happen and withholding agents that find themselves in this situation should make use of the new form to get their house in order post haste.

While withholding agents can continue to use the 2014 W-8BEN-E until the end of October it is unlikely that many will choose to do so this late in the day. With the removal of separate LOB statements, the 2016 BEN-E offers a slightly reduced workload for QIs and NQIs while removing an often overlooked point of risk. Perhaps more importantly, it’s one less piece of paper that clients need to fill out to comply with U.S. tax regulation.

Ross McGill

Ross is the founder and chairman of TConsult. He has spent over 26 years working in the withholding tax landscape with companies developing tax reclaim software and operating outsource tax reclamation services.

Ross not only sees the big picture but is also incredibly detail oriented. He can make even the most complex issues simple to understand. He has authored 10 books (including two second editions) on various aspects of tax, technology, and regulation in financial services, making him one of the leading authorities in the world of tax.