Although I’m British, I sometimes generate revenue from the United States through my internet company. American dollars, yummy, but there’s a catch. To do business in the States, foreigners must fill out a form called W-8BEN, also known as a “Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding”. It’s a deceptively simple one page form, but there are many traps for the unwary.
It’s like those US immigration forms that demand, Do you seek to enter the United States to engage in subversive or terrorist activities? You’re tempted to tick yes, but you just know that won’t end happily.
This is a flavour of what the form wants to know:
Are you a foreign person? Well, no, I’m British. You are the foreigners, but you can’t catch me out that easily, so I tick yes.
Are you a Disregarded entity? Sure, I often feel like one, do I tick this box?
Are you a nonresident alien individual who claims exemption from withholding on compensation? Dude, I just want to pay the right amount of tax, which box do I tick?
Are you a reverse hybrid entity transmitting beneficial owner documentation provided by your interest holders? Like, WTF?
If you get confused by the form, like I did, you might be tempted to download the seven pages of explanatory notes. I strongly urge you not to do this. These are not explanatory notes. Their true purpose is to intimidate and confuse. They are America’s secret weapon in its War On Terror Foreign Companies.
This is a document with a bad attitude. It’s out to get you. Because you’re a dirty, tax-avoiding non-resident alien. You might even be a reverse hybrid entity seeking to engage in subversive activities.
Here’s an example of the document’s tone. The explanation of “What is your country of residence?” is The country that you claim to be your place of residence. Sarcastic or what?
The thing is, this form matters. By completing it, I am exempting my company from paying 30% tax on US income. Or am I agreeing to pay it? I’m not certain. If I fill out the form incorrectly, will I be arrested by gum-chewing gun-toting border guards the next time I travel to America? Will I be held without trial with suspected terrorists and made to answer impossible questions before I can be released?
Sir, are you a reverse hybrid subversive alien?
Sir, do you intend to engage in terrorist activities and/or claim exemption from United States tax withholding?
Are you feeling lucky, punk?
So, I’ve filled out the form as best I can. I don’t know if I’m going to end up paying tax or not. I don’t even know whether I was applying to pay tax or to avoid it. I don’t understand whether I am a non-resident alien, a reverse hybrid, a fiscally transparent non-governmental organisation, a foreign terrorist or just a poor old Disregarded Entity. I don’t know, I don’t care, and I don’t want to do any more business in America. And that, I suspect, is the whole purpose of the form.