Instructions For Form W-8eci - Certificate Of Foreign Person'S Claim For Exemption From Withholding On Income Effectively Connected With The Conduct Of A Trade Or Business In The United States - 2003 Page 2
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4United States Tax Withholding. However, these entities
W-8ECI or other appropriate form. For example, if during
should use Form W-8BEN if they are claiming treaty
the tax year any part or all of the income is no longer
benefits or are providing the form only to claim exempt
effectively connected with the conduct of a trade or
recipient status for backup withholding purposes. They
business within the United States, your Form W-8ECI is
should use Form W-8ECI if they received effectively
no longer valid. You must notify the withholding agent
connected income (for example, income from commercial
and provide Form W-8BEN, W-8EXP, or W-8IMY.
activities).
If you become a citizen or a resident of the United
•
You are acting as an intermediary (that is, acting not
States after you submit Form W-8ECI, you are no longer
for your own account or for that of your partners, but for
subject to the 30% foreign-person withholding rules. You
the account of others as an agent, nominee, or
must notify the withholding agent or payer within 30 days
custodian). Instead, provide Form W-8IMY, Certificate of
of becoming a U.S. citizen or resident. For more
Foreign Intermediary, Foreign Flow-Through Entity, or
information, see the Instructions for the Requester of
Certain U.S. Branches for United States Tax Withholding.
Form W-9.
•
You are a withholding foreign partnership or a
Expiration of Form W-8ECI. Generally, a Form W-8ECI
withholding foreign trust. A withholding foreign
will remain in effect for a period starting on the date the
partnership is, generally, a foreign partnership that has
form is signed and ending on the last day of the third
entered into a withholding agreement with the IRS under
succeeding calendar year, unless a change in
which it agrees to assume primary withholding
circumstances makes any information on the form
responsibility for each partner’s distributive share of
incorrect. For example, a Form W-8ECI signed on
income subject to withholding that is paid to the
September 30, 2003, remains valid through December
partnership. A withholding foreign trust is, generally, a
31, 2006. Upon the expiration of the 3-year period, you
foreign simple trust or a foreign grantor trust that has
must provide a new Form W-8ECI.
entered into a withholding agreement with the IRS under
which it agrees to assume primary withholding
Definitions
responsibility for each beneficiary’s or owner’s distributive
share of income subject to withholding that is paid to the
Beneficial owner. For payments other than those for
trust. Instead, provide Form W-8IMY.
which a reduced rate of withholding is claimed under an
•
You are a foreign corporation that is a personal holding
income tax treaty, the beneficial owner of income is
company receiving compensation described in section
generally the person who is required under U.S. tax
543(a)(7). Such compensation is not exempt from
principles to include the income in gross income on a tax
withholding as effectively connected income, but may be
return. A person is not a beneficial owner of income,
exempt from withholding on another basis.
however, to the extent that person is receiving the
•
You are a foreign partner in a partnership and the
income as a nominee, agent, or custodian, or to the
income you receive from the partnership is effectively
extent the person is a conduit whose participation in a
connected with the conduct of a trade or business within
transaction is disregarded. In the case of amounts paid
the United States. See section 1446 and Rev. Proc.
that do not constitute income, beneficial ownership is
89-31, 1989-1 C.B. 895.
determined as if the payment were income.
Giving Form W-8ECI to the withholding agent. Do not
Foreign partnerships, foreign simple trusts, and foreign
send Form W-8ECI to the IRS. Instead, give it to the
grantor trusts are not the beneficial owners of income
person who is requesting it from you. Generally, this will
paid to the partnership or trust. The beneficial owners of
be the person from whom you receive the payment or
income paid to a foreign partnership are generally the
who credits your account. Give Form W-8ECI to the
partners in the partnership, provided that the partner is
person requesting it before the payment is made to you
not itself a partnership, foreign simple or grantor trust,
or credited to your account. If you do not provide this
nominee or other agent. The beneficial owners of income
form, the withholding agent may have to withhold at a
paid to a foreign simple trust (that is, a foreign trust that is
30% rate (foreign-person withholding) or the backup
described in section 651(a)) are generally the
withholding rate. A separate Form W-8ECI must be given
beneficiaries of the trust, if the beneficiary is not a foreign
to each withholding agent.
partnership, foreign simple or grantor trust, nominee or
other agent. The beneficial owners of a foreign grantor
U.S. branch of foreign bank or insurance company. A
trust (that is, a foreign trust to the extent that all or a
payment to a U.S. branch of a foreign bank or a foreign
portion of the income of the trust is treated as owned by
insurance company that is subject to U.S. regulation by
the grantor or another person under sections 671 through
the Federal Reserve Board or state insurance authorities
679) are the persons treated as the owners of the trust.
is presumed to be effectively connected with the conduct
The beneficial owners of income paid to a foreign
of a trade or business in the United States unless the
complex trust (that is, a foreign trust that is not a foreign
branch provides a withholding agent with a Form
simple trust or foreign grantor trust) is the trust itself.
W-8BEN or Form W-8IMY for the income.
The beneficial owner of income paid to a foreign
Change in circumstances. If a change in
estate is the estate itself.
circumstances makes any information on the Form
W-8ECI you have submitted incorrect, you must notify
Note: A payment to a U.S. partnership, U.S. trust, or
the withholding agent or payer within 30 days of the
U.S. estate is treated as a payment to a U.S. payee that
change in circumstances and you must file a new Form
is not subject to 30% foreign-person withholding. A U.S.
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