Individuals who are not U.S. tax residents are taxed at a 30% rate on income received from the U.S. This applies, for example, to dividends and coupons on securities of U.S. issuers.
However, if you file Form W-8BEN, you may be able to qualify for preferential tax treatment (depending on your country of tax residence) on such income.
For Your Reference: W-8BEN is an Internal Revenue Service (IRS) form in which you confirm that:
- You are not a U.S. tax resident;
- You are a tax resident of another country;
- You are requesting tax benefits under U.S. tax law and/or tax treaties to which the United States is a signatory.
Essential Details:
- Form W-8BEN must be filed before investing in U.S. securities or other financial instruments whose distributions are subject to U.S. taxation.
- It is valid until the end of the third year following the year in which it is signed, or until material information about you changes (for example, a change in your country of tax residence or country of residence).
- If your personal data or tax residency changes, you must submit an updated form.
Form W-8BEN is a U.S. tax form that must be completed if you intend to transact in securities whose payments are subject to U.S. taxation. Such payments include dividends, coupons, and their equivalents. By default, the U.S. income tax rate on such payments is 30%. By filing Form W-8BEN, you reduce your tax rate as follows: to 0% on coupons, regardless of your country of tax residence; to 10% on dividends, depending on your country of tax residence.
You can find the completion instructions in the article.
