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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 2965
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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We are a Spanish private company (limited liability

Customer Question

We are a Spanish private company (limited liability partnership (LLP), which offer services in Spain (location of work) for a USA company. In order to invoice this services, the USA company ask for completion of W-8BEN-E form. Is this really recessary? We understand that it is not applicable in our case.
Submitted: 1 year ago.
Category: Tax
Expert:  Barbara replied 1 year ago.
Welcome to Just Answer. My name is ***** ***** it will be my pleasure to assist you with your tax question today.
Foreign persons are subject to U.S. tax at a 30% rate (the foreign-person withholding rate) on income they receive from U.S. sources that consists of:
Interest (including certain original issue discount (OID));
Dividends;
Rents;
Royalties;
Premiums;
Annuities;
Compensation for, or in expectation of, services performed;
Substitute payments in a securities lending transaction; or
Other fixed or determinable annual or periodical gains, profits, or income.
A withholding agent or payer of the income may rely on a properly completed Form W-8BEN-E to treat a payment associated with the Form W-8BEN-E as a payment to a foreign person who beneficially owns the amounts paid. If applicable, the withholding agent may rely on the Form W-8BEN-E to apply a reduced rate of, or exemption from, withholding. If you receive certain types of income, you must provide Form W-8BEN-E to:
Claim that you are the beneficial owner of the income for which Form W-8BEN-E is being provided or a partner in a partnership subject to section 1446; and
If applicable, claim a reduced rate of, or exemption from, withholding as a resident of a foreign country with which the United States has an income tax treaty that is eligible for treaty benefits.
http://www.irs.gov/instructions/iw8bene/ch01.html
There is a tax treaty in place between the U.S. and Spain which provides for relief from double taxation. It would be in your company's best interest to provide the U.S. company with the W-8-BEN-E to avoid the mandatory 30% withholding on payments made to your company.
Please let me know if you require further information or clarification.
Thank you and best regards,
Barb
Expert:  Barbara replied 1 year ago.
Just following up with you to see if you have any other questions or concerns. If so, please come back to me here at your convenience, and I will be happy to assist you.
If not, please take a moment to rate my answer since that is the only way I receive credit for answering you and alerts Just Answer to compensate me.
Best regards,
Barb