does a Canadian based business require filling out a US W8 form to be paid by a US company?
We perform services for a US-based company with an office in Canada.
We provide the service for the Canada office but US office reports we have to complete a W8 tax
form to get paid.
Is this correct? our accounting does not believe so and says:
...this is not a required form if we don't have a *physical presence in the US.
Just to make sure, he contacted the IRS.
He indicates the "US source income" mentioned in the W8 forms do not apply if you reside in a different country (such as Canada), to payments from US.
The requirement seems to be that you submit the form if you have an office in the US or own operating equipment there.
Otherwise you do not need to fill the forms and the money is not taxable.
In our case then, the US Government does not require a form, eventhough we are performing services for a US based company.
Essentially IRS say the W8 forms are for income we would earn if physically in US.
If providing Service from outside the US, we should not fill the W8 form.