Form W-8BEN-E for Nonprofit Organizations: Tax-Exempt Status

If you represent a charitable foundation, educational institution, religious community, or other nonprofit organization (NPO) and receive income from the U.S. (e.g., grants, donations, or payments for services), you also need to fill out Form W-8BEN-E. Your path for completion will differ from that of commercial companies.

The key for you is to correctly choose the 'Tax-exempt organization' status. In this article, we'll explain who chooses it and, most importantly, what subsequent steps it requires on the form.

Who Chooses the Tax-Exempt Organization Status?

This status in Part I, Line 4 is intended for organizations that are not created for profit but to achieve socially beneficial goals. This includes:

• Charitable foundations
• Religious organizations
• Scientific and educational institutions
• Organizations promoting art or culture

If your organization's goal is not to enrich its owners but to fulfill its statutory mission, this status is most likely for you.

Key Steps: From Chapter 3 to FATCA

For nonprofit organizations, the identification process on the form consists of two stages. It is not enough to simply state that you are an NPO.

Step 1: Chapter 3 Status Selection

In the first step, in Part I, Line 4, you check the box for 'Tax-exempt organization.' This defines the basic type of your organization.

Step 2: Clarifying FATCA Status in Chapter 4

This is the most crucial step. In Part I, Line 5, you must choose the specific type of your nonprofit organization for FATCA purposes. Here are the most common options on the form:

Do you need to claim tax treaty benefits (Part III)?

Even if your organization is tax-exempt, sometimes income can be subject to standard withholding tax (for example, if it is not related to your main activities). In such cases, you may need to complete Part III to apply for tax treaty benefits. The W-8BEN-E form itself provides options for nonprofit organizations to claim such benefits, offering 'Tax-exempt pension trust or pension fund' and 'Other tax-exempt organization' in Part III, Line 14b.

Conclusion

• Nonprofit organization: This is a general category. If you choose it, you will need to complete Part XXII. In this section, you certify that your organization was established exclusively for religious, charitable, scientific, artistic, cultural, or educational purposes, is exempt from income tax in its country, and does not distribute assets to private individuals.
• 501(c) organization: This status applies to organizations that have received an official determination letter from the U.S. Internal Revenue Service (IRS) stating that they meet the requirements of section 501(c) of the U.S. Tax Code. If you have such a letter, you select this status and complete Part XXI.
• Exempt retirement plans: This status is intended for pension funds and similar structures. Its selection requires completing Part XV.

The path for a nonprofit organization when filling out W-8BEN-E is clear: first, you identify yourself as a 'Tax-exempt organization' in Chapter 3, and then you specify your type in Chapter 4 (FATCA), which directs you to the appropriate section—most often Part XXII or Part XXI. This allows you to correctly certify your status and receive income from U.S. sources without incorrect tax withholdings.