Form W-8ECI is the Certificate of Foreign Person’s Claim for Exemption From Withholding on Income Effectively Connected with the Conduct of a Trade or Business in the United States
Generally, a foreign person is subject to U.S. tax on its U.S. source income. Most types of U.S. source income received by a foreign person are subject to U.S. tax of 30%. A reduced rate, including exemption, may apply if there is a tax treaty between the foreign person’s country of residence and the U.S. The tax is generally withheld from the payment made to the foreign person
Form W-8ECI, “Certificate of Foreign Person’s Claim for Exemption from Withholding on Income Effectively Connected with the Conduct of a Trade or Business in the United States”, is required by your management company. Without this form in their files, they are required by U.S. federal law to withhold 30% of your rental income and pay that amount to IRS.
If you receive effectively connected income from sources in the United States, you must provide Form W-8ECI to establish that you are not a U.S. person, claim that you are the beneficial owner of the income for which Form W-8ECI is being provided and claim that the income is effectively connected with the conduct of a trade or business in the United States.
Effectively connected income, after allowable deductions, is taxed at graduated rates applicable to U.S. citizens and residents rather that at the 30% rate. You must report this income on your annual U.S. income tax return.
Expiration of Form W-8ECI. Generally, a Form W-8ECI will remain in effect for a period starting on the date the form is signed and ending on the last day of the third succeeding calendar year, unless a change in circumstances makes any information on the form incorrect. For example, a Form W-8ECI signed on September 30, 2008, remains valid through December 31, 2011. Upon the expiration of the 3-year period, you must provide a new Form W-8ECI.
You should complete and sign form W-8ECI (one per owner) and give to your management company or booking agent to hold on file. We suggest that you keep copies of the completed and signed forms for your records.
Instructions for Completing Form W-8ECI
Part I Identification of Beneficial Owner
- Enter your name
- If you are an INDIVIDUAL insert your country of residence for tax purposes; if you are a FOREIGN CORPORATION insert your country of incorporation; if you are filing for ANOTHER TYPE OF ENTITY enter the country under whose laws the entity is created, organized, or governed
- Enter the name of the disregarded entity receiving the payment – if applicable
- Check the box that applies
- Permanent residence – enter your home country mailing address – not a Post Office Box
- Business address in the U.S. – enter your rental property address – not a Post Office Box
- Enter your U.S. taxpayer identification number – SSN (Social Security Number) or ITIN (Individual Taxpayer Identification Number) if property is owned individually or EIN (Employer Identification Number) if your property is owned by a foreign corporation
- Enter the tax identifying number issued by your home country or the country where you claim tax residence
- Enter the name/number of the account for which you are providing the form
- Enter your date of birth using the format MM/DD/YYY
- Specify the items of income that are effectively connected with the conduct of a trade or business in the U.S. – for example – Rental Income
Part II Certification
Form W-8ECI must be signed and dated by the beneficial owner of the income or authorized representative or agent having legal capacity to sign for the person identified on line 1.
Employer Identification Number (EIN)
Contact our office for assistance in obtaining your EIN