To ITIN or not to ITIN? UK sole trader | US company paying | W-8BEN content

[swissdt]

Morning guys

On the crux of starting work for US company, as a sole trader business in the UK.


I need to fill in a W-8BEN form I believe to stop 30% tax witholdings in the US.


Everywhere I look, different contradicting advice is given. Although some of the most recent findings appear to suggest ITIN not needed, simply use NI number, or sole trader HMRC UTR number.

It relates to Part I, section 5 + 6 (https://www.irs.gov/pub/irs-pdf/fw8ben.pdf)

"
5 U.S. taxpayer identification number (SSN or ITIN), if required (see instructions)
6 Foreign tax identifying number (see instruction
"

Now according to the instructions (https://www.irs.gov/pub/irs-pdf/iw8ben.pdf)

"If you do not have an SSN and are not eligible to get
one, you can get an individual taxpayer identification
number (ITIN). To apply for an ITIN, file Form W-7 with the
IRS. It usually takes 4–6 weeks to get an ITIN. To claim
certain treaty benefits, you must complete line 5 by
submitting an SSN or ITIN, or line 6 by providing a foreign
tax identification number (foreign TIN).
"

So it suggests its more than fine to simply provide a foreign tax ID number in line 6.

Also adding more weight to UK TIN being ok...

"If you are claiming treaty benefits, you are generally
required to provide an ITIN if you do not provide a tax
identifying number issued to you by your jurisdiction of tax
residence on line 6"

and finally

"In addition, if you are not using this form to document a
financial account described above, you may provide the
TIN issued to you by your jurisdiction of tax residence on
line 6 for purposes of claiming treaty benefits (rather than
providing a U.S. TIN on line 5, if required)."


So given all the above, I've been in touch with over 10 different, US/UK tax specialists, and every single one of them is telling me a different story, some say :

I'm being told I need an ITIN, and an EIN.
I need just an ITIN and W-8BEN
I don't need W-8BEN form I need form 8233 (https://www.irs.gov/pub/irs-pdf/f8233.pdf)
I just need W-8BEN and UK TIN
I need to incorporate in US or UK then apply for EIN. An ITIN is only for passive income/rental income.


Anyone here have actual first hand experience of working in the UK, for US, and the W-8BEN? Thanks!!

PS the cost involved in me getting an ITIN is around £299ex and a visit to London to get my passport signed off in person, then a 7-11 week wait, and the US client having to withhold 30% on payments until the ITIN is given to me (apparently) i'd rather avoid this if its not totally necessary.

[jamesbrown]

The W8-BEN is for individuals, the W8-BEN-E is for enterprises.

Did the client explicitly ask you for one? It is their responsibility, not yours, to keep this on record (it isn't filed), but if they ask for one then, sure, you need to provide one.

There is no withholding on the non-US source income of a non-US person. Translated: if you are performing the services wholly in the UK, then there is no withholding.

Form 8233 is only relevant if you are performing services in the US, in which case you have bigger problems

In summary, you need to complete either a W8-BEN or a W8-BEN-E, the latter if you are providing services through a company (sounds like you aren't). Only if asked by the client though.

Form W8-BEN is easy to complete, but I am not going to tell you specifically how to complete it.

What you need is an international tax specialist, not someone with experience of US taxes only (most US-based advisers that don't have experience of international taxation will be clueless about this). If you are getting conflicting advice from different international tax specialists with US experience, then some or all of them are crap. This really isn't that hard.

[swissdt]

The W8-BEN is for individuals, the W8-BEN-E is for enterprises.

Did the client explicitly ask you for one? It is their responsibility, not yours, to keep this on record (it isn't filed), but if they ask for one then, sure, you need to provide one.

There is no withholding on the non-US source income of a non-US person. Translated: if you are performing the services wholly in the UK, then there is no withholding.

Form 8233 is only relevant if you are performing services in the US, in which case you have bigger problems

In summary, you need to complete either a W8-BEN or a W8-BEN-E, the latter if you are providing services through a company (sounds like you aren't). Only if asked by the client though.

Form W8-BEN is easy to complete, but I am not going to tell you specifically how to complete it.

What you need is an international tax specialist, not someone with experience of US taxes only (most US-based advisers that don't have experience of international taxation will be clueless about this). If you are getting conflicting advice from different international tax specialists with US experience, then some or all of them are crap. This really isn't that hard.

Thanks James, w8-ben is what everyones told me so far, up until the point I found an ITIN acceptance agent, who came highly recommended, then this 8233 cropped up


I'm going with the w8-ben and my NI number / or UTR number, as per the IRS own guide saying the ITIN isn't strictly required.

Lots of publishing sites are also saying the ITIN isn't required any longer...


"Key steps to claim reduced or no US withholding tax
The process for how to claim has been simplified in the last few months – albeit the IRS has communicated this very badly, leaving many authors, distributors and bloggers confused! Even the IRS’s own office staff are often confused and unaware of some of these changes!


At-a-glance process
When making a claim you no longer need to obtain a US tax ID (ITIN or EIN). Instead you can now supply your own country’s tax ID. And, as far as I can see, this applies whether you are self-publishing as an individual (which includes sole traders) or through a company – however see below that I recommend you double check this if you’re a company."


Tax on US royalties | Self-publishing adventures

[jamesbrown]

Thanks James, w8-ben is what everyones told me so far, up until the point I found an ITIN acceptance agent, who came highly recommended, then this 8233 cropped up

I see. Oh well, I think you found your ghost in the machine Otherwise, what you say sounds right to me. A W8-BEN is what you’re looking for as a self-employed individual (the E would be for an entity/company). It’s an easy form to complete and it doesn’t actually reach the IRS, as I understand it, but is kept on record by the client as proof of status for withholding purposes.