3 ms·
The burden is indeed on the foreign person to fill out the W8-BEN etc. and pay any taxes due. However, as the withholding agent[1], the US company is liable for
by pmjordan 13y ago
The burden is indeed on the foreign person to fill out the W8-BEN etc. and pay any taxes due. However, as the withholding agent[1], the US company is liable for any unpaid taxes. So in practice, until the contractor proves to the company that they've sorted the situation, the company will need to withhold that portion of the payment as they may have to pay it to the IRS.
In any case, the whole thing is a pretty arduous procedure in international comparison.
[1] http://www.irs.gov/publications/p515/ar02.html#en_US_2013_publink1000224769 http://www.irs.gov/publications/p515/ar02.html#en_US_2013_pu...
- phonon 13y agoYes, but most industrialized countries are parties to a tax treaty, right? So Table 2 would apply, I think. http://www.irs.gov/publications/p515/ar02.html#en_US_2013_publink1000225130 http://www.irs.gov/publications/p515/ar02.html#en_US_2013_pu...
- pmjordan 13y agoPossibly. I couldn't get any conclusive answers when researching this originally. It's complicated enough that you'll almost certainly need to find an expert in the subject to help you or do the filings for you. (in my case it wasn't worth the few hundred dollars to follow it up)
- wagerlabs 13y agoJust mark the "tax treaty" checkbox and be done. Been doing it for over 10 years, including with my offshore company. The offshore bit was pointed out to me recently and so I had to set up a proper European Union company in a hurry. Now all is well.