In another post , I posted that W-8BEN applies to a withholding tax on US earnings for non-Americans. Medea Fleecestealer has no US earnings and 8854 demonstrates non-US Person status. Thus, W-8BEN should be unnecessary. My local bank only wants to see form 8854 and has not requested W-8BEN, while I filled out W-8ECI for a US institution. So, I don't see why W-8BEN should be necessary when one earns nothing in the US. It makes no sense. Form 8854 should be sufficient for a bank for one with local earnings.
The forms themselves (and their instructions) state what their respective purposes are and to which parties they are to be submitted. If your bank is content to accept a 8854 and wants no W-8BEN, that's their prerogative, but the forms and their purposes are not interchangeable: 8854 is submitted directly to IRS, whereas W-8BEN certifications are requested by (and returned to) financial institutions. Suggesting that somebody else arbitrarily substitute a 8854 for a W-8BEN, especially when their financial institution has explicitly requested a W-8BEN, regardless of what you think "should be necessary," is irresponsible.
I view it more as harmless communication, rather than being responsible or irresponsible. If one earns nothing from the US, then it doesn't hurt to point that out. There is nothing wrong with asking for an explanation. Neither the IRS nor banks are perfect and thus they can make mistakes too.
So, why would a bank need a W-8BEN from one who earns nothing from the US? Does this mean that the entire global population has to fill out a W-8BEN simply because most are not Americans who earn nothing from the US? Makes no sense to me.
The benefit of form 8854 is that it demonstrates to the bank that the client has permantally and legally exited the US tax system as far as their local non-US earnings are concerned. It thus shows that their local non-US earnings do not need a US withholding tax (W-8BEN).
The US holder of my W-8ECI is the recipient of my US earnings, which remain in the US. My local earnings are non-US income liberated from the US tax system with form 8854 and not subject to US withholding tax (W-8BEN).
I never said that 8854 substitutes W-8BEN, but rather than W-8BEN withholds taxes on US earnings and that 8854 demonstrates that non-US earnings are not taxable by the US.
Who said, or where is it written, that only people who "earn something from the US" (whatever that means) should complete a W-8BEN?
The instructions say:
Who must file. You must give Form W-8BEN to the withholding agent or payer if you are a foreign person and you are the beneficial owner of an amount subject to withholding. Submit Form W-8BEN when requested by the withholding agent or payer whether or not you are claiming a reduced rate of, or exemption from, withholding. If you're going to bother obeying the IRS, you might as well follow their instructions, which say nothing about "earnings". Because they want their fishing expedition to cast the widest net possible. Your logic is sound, except for the fact that their goal is not the following of logic, but the following of their instructions.
Not so: It is a merely copy of a declaration made to the US government after one's having executed a renunciation or relinquishing of US citizenship. It contains no official acknowledgement or affirmation from the US government (or anyone else) to the effect that the information on the form is in any way correct or true. It's not a legal substitute for a CLN.
You didn't have to say it explicitly. Your treating them interchangeably in your text is enough.
The forms themselves neither do, nor cause, either withholding or taxability. W-8BEN simply affirms that a customer is not liable to US taxation, whereas 8854 initiates closure between a former US citizen and the IRS.
Withholding refers to a tax. So, Form W-8BEN applies to an amount subject to US taxation.
The latest bank form that clients have to fill out states that the securities of a client will be sold without prior notice if their status is found to be "US person" and they don't fill out a W9. In that case, a withholding tax will be applied. So, W-8BEN probably applies to a 28% tax on the forced sale of securities or a 30% tax on income and earnings.
Not true: Neither Form W-8BEN, nor its instructions, address any "amount subject to US taxation." I repeat: W-8BEN only affirms (certifies) that a customer is not liable to US taxation. It has nothing to do with any "amounts" at all, let alone any "amounts" supposedly "subject to US taxation."
Someone who fills out a W-8BEN, will not have any tax deducted on the sale of an investment & only 15% deducted on income from investments if held by a US Broker/Bank. 30% of income will be withheld if it's held in a Swiss Broker / Bank.
So, basically one fills out W-8BEN for a Swiss bank when one has US investment income that is taxed by the US at a rate of 30% since Switzerland has no capital gains tax. Einem »Non-Resident Alien« (in den USA nur beschränkt steuerpflichtiger Ausländer) wird die US-Quellensteuer von derzeit 30 Prozent erlassen, wenn er im Rahmen eines bestehenden Doppelbesteuerungsabkommens gegenüber der Bank oder Investitionsgesellschaft eine entsprechende Erklärung abgibt. Source When one has no US securities, then no W-8BEN is necessary. If one does not fill out W-8BEN for US securities, then 30% on US investment income will be taxed anyways: Weigert sich der Anleger dieses zu unterschreiben, sind die Kapitalerträge automatisch mit 30 Prozent Steuer belastet. Source
This kind of sounds as if W-8BEN is unnecessary for US investment income since it is taxed at a rate of 30% regardless if one fills out the form or not, but necessary for the sale of US securities to avoid taxation within the framework of the double-tax treaty?
Yet, if non-US securities are forcefully sold since one is declared a "US person" and did not fill out a W-9 and , then it seems that one will be taxed at a rate of 28% (backup withholding tax) for which form W-8BEN is then required, since then the non-US investment income is then declared as being US taxable. Did I get that right?
The IRS instructions themselves state that it only applies to an amount subject to US taxation ( withholding ):
Give this form to the withholding agent or payer if you are a foreign person and you are the beneficial owner of an amount subject to withholding Source
A non-American with no US securities and no US income is not asked to fill out W8-BEN. Take for example, the following: Im Bereich des Online-Marketing s wird man so einem W8-BEN-Formular immer dann begegnen, wenn man eine Webseite mit viel internationalem Traffic hat und deshalb einen in den USA ansässigen Online-Vermarkter nutzen möchte. Spätestens bei der ersten Auszahlung der Werbeeinnahmen wird dieser einem dann ein W-8 BEN Formular vor die Nase halten, weil die US-amerikanische Steuerbehörde (IRS) darauf besteht. Source
It says that a non-American will only encounter W8-BEN if they use the services of an US online marketing agency which pays them money for web traffic. In that case, the W8-BEN will be "held under their nose".
My investments held by Schwab, only have 15% withholding tax deducted. With assets held by UBS Switzerland adds another 15% to be more in line with Swiss withholding tax rates, nothing to do with not having CGT in CH. I get a cash repayment off all withholding tax paid on investments within 90 days of submitting my tax return. I then pay Swiss tax as required
A US international tax attorney made the following comments for those who must prove their tax compliance to a Swiss bank. It seems like sound advice:
"1. The banks will turn over the information within the scope of the requests whether or not the U.S. depositor waives the disclosure and whether or not the U.S. depositor was U.S. tax compliant (whether on the original filings or later by OVDI/OVDP).
2. I would not turn over tax returns to the banks. The banks need proof of U.S. tax compliance. That proof may be provided in several ways. I don't think providing complete U.S. tax returns is appropriate. Perhaps a redacted U.S. tax returns showing only the critical reporting information already known to the banks, along with some type of certification or affidavit.
3. I have no control over whether the IRS will check the U.S. tax compliance documents provided by the banks which will, in turn, be provided to DOJ and/or the IRS. I suspect that the IRS will not examine all of the taxpayers who provide proof of tax compliance to the banks; indeed, I suspect they will not examine many of them. Keep in mind that a U.S. taxpayer would be incredibly stupid to provide false compliance documents to the bank which, given the panoply of U.S. criminal provisions that might apply, will create new jeopardy for the U.S. taxpayer.
4. Now, as to bank customers not supplying the bank the proof of compliance the bank needs to get a reduction of its penalty, that might cause the IRS to audit. But if it audits, the taxpayer should be able to prove compliance (even though he or she had not submitted the proof to the bank). And, of course, if compliance was through OVDI/OVDP, the IRS can quickly confirm the compliance in an audit of the U.S. taxpayer and not devote any more resources to that audit. If it is an audit, it will be audit light.
5. Taxpayers should work with the banks to see if they will bear some of the taxpayers' program costs in return for supplying the documents that will reduce the banks penalty. "
The above is in the comments section of his blog post:
http://federaltaxcrimes.blogspot.com...mments/default
The final paragraph in his blog suggests that the banks should pay some of the costs of the request to their customers that they prove tax compliance since the banks are benefiting from it:
Being forced to pay the US is not a "benefit", especially when one did nothing wrong. The US should pay all the costs since this is its problem.
Bullshit...
I'm a non-American with no US securities and no US income, and I've been asked to fill out W8-BEN.
Your willful ignorance is getting tiresome. As I already posted earlier in this thread, the official purpose (also in Switzerland) of form W-8BEN is to certify that an account as not subject to US taxation, based on the nationality of the account's owner/beneficiary.
Ok, but of the 20 years that I've lived in Switzerland, I've never once been asked to fill out a W8-BEN for a dozen or so banks in Switzerland, Germany or other places in Europe, including investment accounts with no US securities. The only time that I've ever been requested to fill out a W-8BEN was when the US institution was the direct recipient of US income. Once a bank advised me that if I were to purchase US stocks, then I would have to fill out such a form. Never once has a bank needed a W-8BEN to certify that an account as not subject to US taxation. The US holder of the W-8ECI that I filled out stated that they only needed the form in the case that the IRS requests such concerning US income.