If you are a UK resident and due to receive US royalty income which will be subject to withholding tax of 30% then you can complete a form W8-BEN and give to the withholding agent so no US tax is deducted from your payment. The form W8-BEN remains valid until the last day of the third succeeding calendar year eg if you signed on 12 November 2019 it would remain in force until 31 December 2021.
If you are a sole trader the form to complete can be found here.
Completing Part I of the form is relatively straight forward. as a sole trader you don’t need to complete question 5 and 7. Question 6 is your UTR number.
Completing Part II, question 9 you need to complete with UK. Question 10, for royalties Article 12 para 1 and the claim is for a 0% withholding tax rate.
Completing Part III signature
If you are a company the form to complete can be found here .
The first thing you need to do is obtain a EIN number for your company. This can be done by completing a form SS-4. Alternatively you can telephone IRS on 001 267 941 1099 and press option 2. You then need to answer a series of questions. After giving your name and address explain that you only want an EIN in order to comply with IRS Withholding Regulations and that you are NOT starting an entity in the US. You will need the following information about your own company:
Completing Part I, question 1 and 2 are straightforward. Question 3 can usually be disregarded. Question 4, tick corporation. Question 5, tick Active NFFEE. Question 6, 7 straightforward. Question 8 this is the number you have called US to obtain. Question 9a, b and 10 can be ignored.
Parts II, IV, V, VI, VII, VIII, IX, X, XI, XII, XIII, XIV, XV, XVI, XVII, XVIII, XIX, XX, XXI, XXII, XXIII, XXIV, XXV, XXVI, XXVII, XXVIII, XXIX can be disregarded
Part III 14a, tick and complete with UK, 14b tick “the beneficial owner derives the item of income for which the treaty benefits are claimed, and, if applicable meets the requirements of the treaty provision dealing with limitation on benefits. Tick also “company that meets the ownership and base erosion test”. Question 15 if income is from royalties Article 12, para1 and “The company is resident in the UK and does not carry on business in the US nor does it have a permanent establishment in US”
Part XXX Signature required
If you would like any further help, please don’t hesitate to get in touch with me by email firstname.lastname@example.org
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