How to fill out Form W-8ECI

Who needs this form

Use Form W-8ECI if you are a foreign person or a foreign entity, you receive US-source income, and that income is effectively connected with a trade or business you carry on in the United States. A foreign company with a US branch, for example, gives it to the US payers of that branch's income. A foreign dealer in securities claiming the line 12 exception for publicly traded partnership interests also uses it.

The form says it plainly: anyone who submits it must file an annual US income tax return reporting that income.

Many foreign freelancers and companies need a different form:

• To claim only foreign status or treaty benefits on income that is not connected with a US business, an individual gives Form W-8BEN and an entity gives Form W-8BEN-E. Not sure which? See W-8BEN or W-8BEN-E.
• A US person, including a US LLC that is not disregarded, gives Form W-9.
• A nonresident individual claiming an exemption on pay for personal services uses Form 8233 or Form W-4.
• Intermediaries use Form W-8IMY; foreign governments and similar bodies use Form W-8EXP.
• A foreign partner whose share of partnership income is effectively connected generally gives W-8BEN or W-8BEN-E to the partnership, not W-8ECI.

If you get both kinds of income from the same payer, give W-8ECI for the connected income and the right other form for the rest.

What to have ready

• Your legal name, or your company's, and the country where you are a tax resident or where the company was organized.
• Your permanent residence address abroad (not a P.O. box or in-care-of address) and your US business address.
• A US taxpayer identification number: an SSN or ITIN for an individual, an EIN for an entity. Without it the form is not valid.
• Your foreign tax identifying number, if your country issues one.
• A short list of the specific items of income that are connected with your US business.

Step by step

1. Enter your name and country Line 1 and Line 2

   On Line 1, write your name or your entity's name. If a disregarded entity receives the payment, the foreign owner fills in the form and puts its own name here. On Line 2, an entity enters the country where it was created; an individual enters the country of tax residence.

2. Name a disregarded entity and pick the entity type Line 3 and Line 4

   Line 3 is optional: add the name of a disregarded entity that receives the payment. On Line 4, check one box for the type of beneficial owner, such as individual, corporation or partnership. A foreign government now chooses between an integral part of a foreign government and an entity it controls.

3. Give your addresses Line 5 and Line 6

   Line 5 is your permanent residence address: where you are a tax resident, or your company's registered address. Line 6 is your business address in the United States. Neither can be a P.O. box or an in-care-of address.

4. Enter your US tax number Line 7

   Write your SSN, ITIN or EIN and check which it is. This line is required: a W-8ECI without a US TIN is not valid. An individual without an SSN applies for an ITIN on Form W-7; an entity applies for an EIN on Form SS-4.

5. Add your foreign tax number Line 8a and Line 8b

   If your account is with a US financial institution and the income is reported on Form 1042-S, enter your foreign tax identifying number on Line 8a. If your country does not require you to have one, check Line 8b instead.

6. Add a reference and your date of birth Line 9 and Line 10

   Line 9 is for anything the payer asks you to add, such as an account number. An individual account holder enters the date of birth on Line 10 as MM-DD-YYYY.

7. List the connected income Line 11

   Describe each item of income that is effectively connected with your US trade or business. Be specific, for example consulting fees earned through your US branch.

8. Check line 12 only if you are a securities dealer Line 12

   Most people leave it blank. It certifies an exception from withholding on transfers of publicly traded partnership interests for dealers in securities.

9. Sign and date Part II

   The beneficial owner signs and dates the form, or an authorized representative or officer signs for an entity. Check the box that says you have the capacity to sign. An agent signing under a power of attorney attaches it.

Common mistakes

Where it goes

Give the signed form to the withholding agent or payer, before the payment is made. Don't send it to the IRS. Without a valid form, the payer must withhold 30% or apply backup withholding.

A withholding agent may accept an electronic signature if its own system can show that an authorized person signed, for example with a date and time stamp. The instructions add that typing your name in the signature line is not an electronic signature. Ask the payer how it wants the form before you sign.

Keep a copy. Give a new form to each payer when it expires or when your facts change.