U.S.A.: IRS releases a new draft of Form W-8BEN-E and instructions

The U.S. Internal Revenue Service (IRS) has published on its website a draft Certificate of Status of Beneficial Owner for United States Withholding and Reporting (Entities), known as Form W-8BEN-E, and its related instructions. Comments can be submitted directly to the IRS website on the Comments on Tax Forms and Publications page.

This new draft Form W-8BEN-E contains significant changes, including the following:

• New checkboxes have been added to Part III - Claim of Tax Treaty Benefits - for each of the main tests that can be met to satisfy a Limitation on Benefits (LOB) provision, and this in order to support the eligibility of the beneficial owner to such a claim. The taxpayer is required to check the relevant box associated with the LOB test it meets with respect to the treaty benefits associated with this form, or to check a box that it has obtained a favourable discretionary determination from the U.S. competent authority that qualifies for the treaty benefits associated with this form.
• A new checkbox has been added in Line 5 – Chapter 4 Status - for payments made to payees for accounts they hold that are not financial accounts.
• New wording has been included in Part XXIX – Substantial U.S. Owners of Passive NFFE – to permit the section to be used by a Passive NFFE that is disclosing Controlling Persons pursuant to an IGA.

In addition, the draft instructions provide for coordination between the Chapter 4 regulations (the Regulations) and the Intergovernmental Agreements (IGAs) in regards to proper certification for nonreporting FFIs. More specifically, the instructions address the scenario of an FFI that meets the requirements of both a non-reporting IGA FFI under IGA and a deemed-compliant FFI status under the Regulations, and the scenario of an owner-documented FFI incorporated in an IGA country.

The above information is not intended to be exhaustive. We will continue to monitor the IRS and commentator publications and will provide customers with further information in due course.