Instructions For Form W-8exp - Certificate Of Foreign Government Or Other Foreign Organization For United States Tax Withholding And Reporting Page 3

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2018, for chapter 3 purposes. For more exceptions to the
Generally, an amount subject to chapter 4 withholding
indefinite validity period, see Regulations section
is an amount of U.S. source FDAP income that is also a
1.1441-1(e)(4)(ii) for chapter 3 purposes and Regulations
withholdable payment as defined in Regulations section
section 1.1471-3(c)(6)(ii) for chapter 4 purposes.
1.1473-1(a) to which an exception does not apply under
chapter 4. The exemptions from withholding or taxation
Change in circumstances. If a change in circumstances
provided for under chapter 3 are not applicable when
makes any information on the Form W-8EXP you have
determining whether withholding applies under chapter 4.
submitted incorrect, you must notify the withholding agent
For exceptions applicable to the definition of a
within 30 days of the change in circumstances and you
withholdable payment, see Regulations section
must file a new Form W-8EXP or other appropriate form.
1.1473-1(a)(4) (exempting, for example, certain
Definitions
nonfinancial payments).
Beneficial owner. For payments other than those for
Amounts exempt from tax under section 895. Section
which a reduced rate of, or exemption from, withholding is
895 generally excludes from gross income and exempts
claimed under an income tax treaty, the beneficial owner
from U.S. taxation income a foreign central bank of issue
of income is generally the person who is required under
receives from obligations of the United States (or of any
U.S. tax principles to include the payment in gross income
agency or instrumentality thereof) or from interest on
on a tax return. A person is not a beneficial owner of
deposits with persons carrying on the banking business
income, however, to the extent that person is receiving the
unless such obligations or deposits are held for, or used in
income as a nominee, agent, or custodian, or to the extent
connection with, the conduct of commercial banking
the person is a conduit whose participation in a
functions or other commercial activities of the foreign
transaction is disregarded. In the case of amounts paid
central bank of issue.
that do not constitute income, beneficial ownership is
Amounts exempt from tax under section 892. Only a
determined as if the payment were income.
foreign government or an international organization as
Foreign partnerships, foreign simple trusts, and foreign
defined below qualifies for exemption from taxation under
grantor trusts are not the beneficial owners of income paid
section 892. Section 892 generally excludes from gross
to the partnership or trust. The beneficial owners of
income and exempts from U.S. taxation income a foreign
income paid to a foreign partnership are generally the
government receives from investments in the United
partners in the partnership, provided that the partner is not
States in stocks, bonds, or other domestic securities;
itself a partnership, foreign simple or grantor trust,
financial instruments held in the execution of
nominee, or other agent. The beneficial owners of income
governmental financial or monetary policy; and interest on
paid to a foreign simple trust (that is, a foreign trust that is
deposits in banks in the United States of monies
described in section 651(a)) are generally the
belonging to the foreign government. Income of a foreign
beneficiaries of the trust, if the beneficiary is not a foreign
government from any of the following sources is not
partnership, foreign simple or grantor trust, nominee, or
exempt from U.S. taxation.
other agent. The beneficial owners of income paid to a
The conduct of any commercial activity.
foreign grantor trust (that is, a foreign trust to the extent
A controlled commercial entity.
that all or a portion of the income of the trust is treated as
The disposition of any interest in a controlled
owned by the grantor or another person under sections
commercial entity. For the definition of “commercial
671 through 679) are the persons treated as the owners of
activity,” see Temporary Regulations section 1.892-4T.
the trust. The beneficial owners of income paid to a
Section 892 also generally excludes from gross income
foreign complex trust (that is, a foreign trust that is not a
and exempts from U.S. taxation income of an international
foreign simple trust or foreign grantor trust) is the trust
organization received from investments in the United
itself.
States in stocks, bonds, or other domestic securities and
The beneficial owner of income paid to a foreign estate
interest on deposits in banks in the United States of
is the estate itself.
monies belonging to the international organization or from
These beneficial owner rules apply primarily for
any other source within the United States.
purposes of withholding under sections 1441 and 1442.
Amounts subject to withholding. Generally, an amount
The rules also generally apply for purposes of section
subject to chapter 3 withholding is an amount from
1446, with a few exceptions. See Regulations section
sources within the United States that is fixed or
1.1446-1 for instances where the documentation
determinable annual or periodical (FDAP) income. FDAP
requirements of sections 1441 and 1442 differ from
income is all income included in gross income, including
section 1446.
interest (as well as OID), dividends, rents, royalties, and
Chapter 3. Chapter 3 means Chapter 3 of the Internal
compensation. FDAP income does not include most gains
Revenue Code (Withholding of Tax on Nonresident Aliens
from the sale of property (including market discount and
and Foreign Corporations). Chapter 3 contains sections
option premiums), as well as other specific items of
1441 through 1464.
income described in Regulations section 1.1441-2 (such
as interest on bank deposits and short-term OID).
Chapter 4. Chapter 4 means Chapter 4 of the Internal
Revenue Code (Taxes to Enforce Reporting on Certain
For purposes of section 1446, the amount subject to
Foreign Accounts). Chapter 4 contains sections 1471
withholding is the foreign partner’s share of the
through 1474.
partnership’s effectively connected taxable income.
-3-
Instructions for Form W-8EXP (Rev. 7-2017)

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