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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
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Experience:  15years with H & R Block. Divisional leader, Instructor
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what is the difference between a w8eci and a w8ben ?

Resolved Question:

I am a uk tax resident , I am purchasing a note (private loan contract) from a US maryland LLC that will make schedule interest payments. I will file a w8 to claim tax treaty benefits, should this be a w8ben or a w8eci. The payments are regular, known and scheduled, connected to rental income.

Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Robin D :

Hello and thank you for using Just Answer,
You would use the W8 ECI in this case. You will need an Individual Tax Identification Number to list on line 6 or the withholding exemption will not be valid.

Robin D :

I hope the information was helpful, I know all the different types of W8 documents can be confusing.

Customer:

the w8ben is only used for income connected with us registered securities ?

the individual tax identification number can be obtained online ?

Customer:

thank you

Robin D :

Let me get you the IRS (they issue those) url fo rthe ITIN request

Robin D :

one sec please

Robin D :

They do not issue those online

Robin D :

unfortunately

Robin D :

because documentation must me supplied.

Robin D :

The W8 forms are not sent to the IRS by the requester. They retain those so they can explain (if asked) why they did not withhold.

Customer:

ok , the w8ben does not need an itin ? i ve filed those regularly , is this correct ?


 

Robin D :

That is correct

Robin D :

Many think you have to have one for the BEN but you do not

Robin D :

It depends on the nature of the payment

Customer:

this is a private note that pays interest , basically but not registered

Robin D :

It is a note on a rental property though which constitutes effectively connected income in the US if the rental property is in the US

Robin D :

as you are not in the US you can request the relief from the withholding based on that

Customer:

yes , that is the idea , so claim the uk tax treaty benefits which bring the withholding from 30% to 0%

Robin D :

Correct

Customer:

ok ,thank you very much !

Robin D :

the US company needs to be able to deduct the interest

Robin D :

so they need to show where it went

Robin D :

but without the W8 they cannot deduct

Customer:

that is also clear

Robin D :

because teh IRS needs to know who got the interest

Robin D :

Good

Robin D :

did not intend to ramble

Robin D :

some wish to know why

Customer:

ok , thanks for this , I think i can close the chat now

Robin D :

Thank you

Customer:

have a good rest of the day , thank you again

Robin D :

Your positive rating is always thanks enough.


 

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7728
Experience: 15years with H & R Block. Divisional leader, Instructor
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Robin D.
Robin D.
Tax Professional
7728 Satisfied Customers
15years with H & R Block. Divisional leader, Instructor