Tax Information and Reporting - Non-US - Initial Application & Data Collection (2024)

Initial Application & Data Collection

All non-US persons and entities are required to complete an IRS Form W-8 to certify your country of tax residence and to establish whether you qualify for a reduced rate of withholding when opening an account. The type of W-8 form completed depends on the whether or not you open an individual account or an entity account. W-8 Forms are not provided to the IRS.

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• General information W-8
• W-8BEN
• W-8IMY

Valid W-8 Forms

Forms W-8 are valid for the year in which they are signed and for the next three calendar years. For example, a Form W-8BEN signed on March 5, 2018, remains valid through December 31, 2021, and must be resubmitted to IBKR no later than January 30, 2022.

Tax withholding determination:

Generally, tax is withheld at a rate of 30% on payments of US source stock dividends and substitute payments in lieu. The rate of withholding may be reduced if there is a tax treaty between your country of tax residence and the US

US Tax withholding on distributions from Publicly Traded Partnerships is withheld at 37% (2018) as this is earned income in the US

Updating Form W-8:

Forms W-8 are valid for the year in which they are signed and for the next three calendar years. For example, a Form W-8BEN signed on March 5, 2018, remains valid through December 31, 2021, and must be resubmitted to IBKR no later than January 30, 2022. Failure to update your W-8 form will result in withholding on all income including gross proceeds from securities sales.

Note: IBKR will send you an email when you are required to resubmit your Form W-8.

Requirement to Complete Form W-8:

Form W-8, Certificate of Foreign Status, must be on file with IBKR. This form must be renewed every three years. If the form W-8 is no longer valid, IBKR will assume that you are a non-US person and withhold US tax at 30% on interest, dividends, gross proceeds and payments and lieu. Treaty rates, if applicable, will no longer apply.

Note that if you complete Form W-8 you will not receive a Consolidated Form 1099, but you may receive Form 1042S.

Withholding Penalty

If you fail to provide a Form W-8, or do not resubmit a new W-8 when prompted upon the three-year expiration, additional withholding will apply. IBKR encourages its clients to consult with their tax advisors for further guidance on how to seek relief for any tax withheld.

Refer to information below for the specific type of W-8 you should complete and how long your Form W-8 is valid from the date signed.

Form W-8BEN (Individual)

Click here for a sample Form W8-BEN

Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, allows you to certify that you are a not a US person and claim treaty benefits under an existing tax treaty between the US and your country of tax residence, if applicable.

You should complete Form W-8BEN if:

• You are opening an individual or joint account and are not a US Citizen, green card holder or legal resident of the US For joint account owners: both owners must be non –US Citizens, green card holders or legal US residents to complete Form W-8BEN. If one owner is a US Citizen, green card holder or legal resident you should complete a W-9.
• If you are a student in the US who is not a US Citizen or green card holder on an F-1 Visa even though you are considered a US Resident.

Part I identifies the name, location and the beneficial owner, which for purposes of Forms W-8, is the owner of the account. You must provide your local tax or social identification number for the form to be valid.

In Part II you must certify your country of tax residence or incorporation in order to claim tax treaty benefits.

How Long Is Form W-8BEN Valid?

A W-8BEN (Individual) completed without a US taxpayer identification number, is in effect beginning on the date signed until the last day of the third succeeding calendar year, in general three years. If a change in circ*mstances causes any information on the form to be incorrect, this will render the form invalid. Towards the end of the three-year period you will receive an email request to resubmit your W-8BEN (Individual) form.

You are not required to resubmit Form W-8BEN (Individual) if you have a US taxpayer ID or ITIN and provided the number on the form.

W-8BEN-E (Entities)

Form W-8BEN-E must be used by entities that are beneficial owners of a payment, or of another entity that is the beneficial owner. The form has thirty parts. All filers will complete Parts I and XXIX.

Who should complete this form?

• You are the representative of an entity that is not organized in the US but is recognized as a corporation under US law. Refer toa list of entitiesconsidered to beper se corporations.
• You represent a foreign entity and you have made an election on IRS Form 8832 to be treated as a corporation for US tax purposes.
• You are a foreign tax-exempt organization or foreign private foundation that is not a recognized US charity.
• You are the trustee of a complex trust as defined under US law.
• You are the representative of an estate.

Part I of the form requires general information, the QI status, and the FATCA classification of the filer. Question 4 of Part I requests the QI status. If the filer is a disregarded entity, partnership, simple trust, or grantor trust, then the filer must complete Part III if the entity is claiming benefits under a U.S. tax treaty.

Question 5 requests the FATCA classification of the filer. The classification indicated determines which one of the Parts IV through XXVIII must be completed.

Part XXIX requires certification, under penalty of perjury, by the payee or a person authorized to sign on the payee’s behalf. This part of the final form also contains the following that did not appear in the prior W-8BEN form: "I agree that I will submit a new form within 30 days if any certification made on this form becomes incorrect."

Note that if the filer is a passive NFFE (Non-financial foreign entity), it must complete Part XXVI as well as Part XXX if it has substantial US owners. For a Passive NFFE, a specified US person is a substantial US owner if the person has more than a 10 percent beneficial interest in the entity.

Completion of the remaining parts form W-8BEN-E will depend upon the FATCA classification of the filer. The classifications on the newest version Form W-8BEN-E maintain the classification of a Restricted Distributor (in the final form Part XI).

As this form is complex we strongly suggest that you read the instructions for the completion of the form available for free on www.IRS.GOV. Additionally you should consult your local tax advisor.

Form W-8IMY

Form W-8IMY is submitted generally by a payment recipient (the “filer”) with non-beneficial owner status, i.e. an intermediary. Such intermediary can be a U.S. branch, a qualified intermediary, a non-qualified intermediary, foreign partnership, foreign grantor or a foreign simple trust. Form W-8IMY requires a tax identification number.

Part I of the Form adds FATCA classification. Part I of the form requires general information, the Chapter 3 QI status, and the Chapter 4 FATCA classification of the filer.

Part II Disregarded Entity or Branch Receiving Payment. Part II of this form is to be completed if the entity is a disregarded entity or a branch receiving payment as an intermediary. Part II only applies to branches of an FFI outside the FFI’s country of residence.

Question 4 of Part I requests the QI status. If the filer is a Qualified Intermediary, the filer must complete Part III, Qualified Intermediary. If the filer is a Nonqualified Intermediary, the filer must complete Part IV, Nonqualified Intermediary.

Territory Financial Institutions complete Part V. U.S. Branches complete Part VI.

Withholding Foreign Partnership or Withholding Foreign Trusts complete Part VII.

Nonwithholding Foreign Partnership, Nonwithholding Foreign Simple Trust, and Nonwithholding foreign grantor trusts must complete Part VIII.

Question 5, Part I requests the FATCA classification of the filer. The classification indicated determines which one of the Parts IX through XXVII must be completed.

Chapter 4 Status Certifications Parts IX – XXVI

Parts IX – XXVII of this form address the FATCA Status of the entity.