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Amounts subject to withholding. Generally, an amount
subject to chapter 3 withholding is an amount from
sources within the United States that is fixed or
determinable annual or periodical (FDAP) income
(including such an amount on a PTP distribution except as
indicated otherwise). FDAP income is all income included
in gross income, including interest (as well as OID),
dividends, rents, royalties, and compensation. FDAP
income does not include most gains from the sale of
property (including market discount and option
premiums), as well as other specific items of income
described in Regulations section 1.1441-2 (such as
interest on bank deposits and short-term OID).
Generally, an amount subject to chapter 4 withholding
is an amount of U.S. source FDAP income that is also a
withholdable payment as defined in Regulations section
1.1473-1(a). The exemptions from withholding provided
for under chapter 3 are not applicable when determining
whether withholding applies under chapter 4. For specific
exceptions applicable to the definition of a withholdable
payment, see Regulations section 1.1473-1(a)(4)
(exempting, for example, certain nonfinancial payments).
For purposes of section 1446(a), the amount subject to
withholding is the foreign partner’s share of the
partnership’s effectively connected taxable income. For
purposes of section 1446(f), the amount subject to
withholding is the amount realized on the transfer of a
partnership interest.
Beneficial owner. For payments other than those for
which a reduced rate of, or exemption from, withholding is
claimed under an income tax treaty, the beneficial owner
of income is generally the person who is required under
U.S. tax principles to include the payment in gross income
on a tax return. A person is not a beneficial owner of
income, however, to the extent that person is receiving the
income as a nominee, agent, or custodian, or to the extent
the person is a conduit whose participation in a
transaction is disregarded. In the case of amounts paid
that do not constitute income, beneficial ownership is
determined as if the payment were income.
Foreign partnerships, foreign simple trusts, and foreign
grantor trusts are not the beneficial owners of income paid
to the partnership or trust. The beneficial owners of
income paid to a foreign partnership are generally the
partners in the partnership, provided that the partner is not
itself a partnership, foreign simple or grantor trust,
nominee, or other agent. The beneficial owners of income
paid to a foreign simple trust (that is, a foreign trust that is
described in section 651(a)) are generally the
beneficiaries of the trust, if the beneficiary is not a foreign
partnership, foreign simple or grantor trust, nominee, or
other agent. The beneficial owners of a foreign grantor
trust (that is, a foreign trust to the extent that all or a
portion of the income of the trust is treated as owned by
the grantor or another person under sections 671 through
679) are the persons treated as the owners of the trust.
The beneficial owners of income paid to a foreign complex
trust (that is, a foreign trust that is not a foreign simple
trust or foreign grantor trust) is the trust itself.
Generally, for purposes of sections 1446(a) and (f), the
same beneficial owner rules apply, except that under
section 1446(a) and (f) a foreign simple trust is required to
provide a Form W-8 on its own behalf rather than on
behalf of the beneficiary of such trust.
A payment to a U.S. partnership, U.S. trust, or U.S.
estate is treated as a payment to a U.S. payee. A U.S.
partnership, trust, or estate should provide the withholding
agent with a Form W-9 pertaining to itself. However, for
purposes of section 1446(a), a U.S. grantor trust or
disregarded entity shall not provide the withholding agent
a Form W-9. Instead, the entity must provide a Form W-8
or Form W-9 pertaining to each grantor or owner, as
appropriate, and, in the case of a trust, a statement
identifying the portion of the trust treated as owned by
each such person. For purposes of section 1446(f), the
grantor or owner must provide a Form W-8 or Form W-9 to
certify its status and the amount realized allocable to the
grantor or owner, which, alternatively, can be provided by
the U.S. grantor trust on behalf of a grantor or owner.
Chapter 3. Chapter 3 means chapter 3 of the Internal
Revenue Code (Withholding of Tax on Nonresident Aliens
and Foreign Corporations). Chapter 3 contains sections
1441 through 1464, excluding sections 1445 and 1446.
Chapter 4. Chapter 4 means chapter 4 of the Internal
Revenue Code (Taxes to Enforce Reporting on Certain
Foreign Accounts). Chapter 4 contains sections 1471
through 1474.
Deemed-compliant FFI. Under section 1471(b)(2),
certain FFIs are deemed to comply with the regulations
under chapter 4 without the need to enter into an FFI
agreement with the IRS. However, certain
deemed-compliant FFIs are required to register with the
IRS and obtain a Global Intermediary Identification
Number (GIIN). These FFIs are referred to as
registered
deemed-compliant FFIs. See Regulations section
1.1471-5(f).
Disregarded entity. A business entity that has a single
owner and is not a corporation under Regulations section
301.7701-2(b) is disregarded as an entity separate from
its owner. A disregarded entity does not submit this Form
W-8BEN to a partnership for purposes of section 1446 or
to an FFI for purposes of chapter 4. Instead, the owner of
such entity provides appropriate documentation. See
Regulations section 1.1446-1 and section 1.1471-3(a)(3)
(v), respectively.
Certain entities that are disregarded for U.S. tax
purposes may be recognized for purposes of claiming
treaty benefits under an applicable tax treaty (see the
definition of Hybrid entity,later). A hybrid entity claiming
treaty benefits is required to complete Form W-8BEN-E.
See Form W-8BEN-E and its instructions.
Financial account. A financial account includes:
•
A depository account maintained by a financial
institution;
•
A custodial account maintained by a financial
institution;
•
Equity or debt interests (other than interests regularly
traded on an established securities market) in investment
entities and certain holding companies, treasury centers,
or financial institutions as defined in Regulations section
1.1471-5(e);
•
Cash value insurance contracts; and
•
Annuity contracts.
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Instructions for Form W-8BEN (Rev.10-2021)