What a valid claim needs
- The payee is a resident of the treaty country under the treaty's residence article (generally, liable to tax there by reason of residence).
- The payee is the beneficial owner of the income, not an agent or conduit for someone else.
- For an entity, it meets the treaty's limitation-on-benefits (LOB) article, if the treaty has one.
- The income meets the article's own conditions: shareholding and holding period for direct dividends, the kind of interest, day counts and dollar caps for pay for services.
- The payer holds a valid certificate before the payment: W-8BEN Part II, W-8BEN-E Part III, or Form 8233 for an individual's pay for services.
The checks on the face of the form
| Check | What to look for |
|---|---|
| Treaty country and residence address | The country claimed should match the permanent residence address. A residence address outside the treaty country, or a U.S. address, is reason to know the claim may be unreliable unless the payee explains it and, where required, gives documentary evidence. |
| Article and rate | The article should be the one for this income (the royalty article for a license fee, not business profits) and the rate should not be below the treaty rate in the treaty table. |
| Special conditions | Where the rate depends on conditions (direct dividend, exempt pension fund, government lender), the payee must state them in the explanation line. |
| LOB test | On the W-8BEN-E, line 14b names the LOB test met. A treaty with an LOB article and no box checked is an incomplete claim. |
| TIN | A U.S. TIN or a foreign TIN, as discussed below. |
| Signature and date | Signed by the beneficial owner or an authorized person, with the capacity box checked on a W-8BEN-E. |
Limitation on benefits
Most modern U.S. treaties limit benefits to residents with real ties to the treaty country, so that a company formed there only to collect U.S. income at a low rate is refused. An entity qualifies under one of the tests the article lists: publicly traded company or subsidiary, ownership and base erosion, active trade or business, derivative benefits, or a discretionary determination by the IRS. Individuals are generally not affected. The IRS's Table 4 lists the article for each treaty, and each country page on this site names it. A few older treaties (Greece, Pakistan, the Philippines, Poland, Romania and the U.S.S.R. treaty) have no LOB article.
The TIN requirement
A treaty claim generally requires the beneficial owner's U.S. TIN or, under Treas. Reg. 1.1441-6, a foreign TIN issued by the treaty country. The exception is income from marketable securities (actively traded or publicly offered), for which the treaty rate can be applied without either; those payments use the special income codes 13, 51, 52, 53 and 54 on Form 1042-S. Form 8233 and Form W-8ECI always require a U.S. TIN.
How long a claim lasts
A W-8BEN or W-8BEN-E generally remains valid until the last day of the third calendar year after the year it was signed, unless a change in circumstances makes it incorrect: the payee moves, changes its entity type, or stops meeting the LOB test. Form 8233 covers one tax year. The W-8 validity calculator gives the date and the separate rules for treaty claims.
Using the IRS tables, and their limits
The IRS Tax Treaty Tables summarize the rates and the main conditions, and the IRS says they are not a complete guide to eligibility. They also lag: Table 1 is dated May 2023 and does not reflect, for example, the 2019 U.S.-Japan protocol that exempts most interest. For any material payment, read the article and the Treasury technical explanation. Each country page on this site shows the article for every figure.
The rate the payee writes on the form does not bind you. If the form claims 0% on royalties and the treaty rate is 10%, withhold 10% and report the treaty rate.
When the claim was wrong
A withholding agent that relied in good faith on a valid certificate, without actual knowledge or reason to know that it was unreliable, is not liable for the under-withholding. Without that reliance, IRC 1461 makes the agent liable for the tax that should have been withheld, plus interest and penalties. Over-withholding is easier: it can be repaid or set off through the reimbursement and set-off procedures before the Form 1042-S is filed, and after that the payee files its own U.S. return for a refund.
Questions people ask
Does the payee need to file Form 8833?
Form 8833 discloses treaty-based return positions on the payee's own U.S. return. It is not a payer's check, and the regulations waive it for many claims of reduced withholding on fixed or determinable income.
Can we apply a treaty rate to a payee in a country with no treaty?
No. Residents of countries without a treaty are withheld on at the statutory rates. Russia (most of the treaty suspended since August 16, 2024) and Hungary (terminated for 2024 onward) are now in that position.
A partnership in a treaty country claims the treaty rate. Can we accept it?
A fiscally transparent entity is generally not the beneficial owner; its partners claim the treaty, on documentation passed through a W-8IMY. A partnership that is taxed as a company in its home country can claim as a hybrid entity on a W-8BEN-E. The W-8BEN-E instructions cover the cases.