When paying foreign vendors, must you get a W8 (like you have to for W9) or can you pay without getting W8. Also, are supplies an exception? I have a foreign supplier that does not want to fill out the form since they never have before with their US customers. Thank you
When paying foreign vendors, must you get a W8 (like you have to for W9) or can you pay without getting W8. Also, are supplies an exception? Thank you
Answers
You only need a w8 if services were provided on the US.
Examples:
If you bought something from overseas and it was imported, no.
If you hired a consultant and they did work in the US you need a W8 only I'd they claim no taxes because they are from a treaty country.
If they give you and you accept their W8 no 1042 is done, otherwise you need to file a 1042 and withhold 30%
1
Let add an additional note:
The acceptance of a W8 is precarious. Why?
1. The IRS leaves it up to you, the W8 recipient to determine the bona fide of the documentation. They sort of leave out what happens if their determination is different than yours....
2. Many times, the documentation is written in the language of the country who issued it (makes sense). Do you read that language? Are you going to take the word of the person who gave it to you?
3. Most governments around the world "stamp" official documents. That's great, read number 2. But make sure the document is stamped.
I have received many a W8. I've only rejected one or two, because the first came from the guys
Wayne: right on.
Adding a nit: if the work is consultant work, but it is performed overseas, then no.
If the thing purchased is royalty bearing, then you need to look at the treaty.
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nit accepted.
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FP&A