How to Fill Out the Tax Treaty Benefits Section of Form W-8BEN (Part II): A Detailed Guide

This section is the most critical part of Form W-8BEN for any freelancer or self-employed individual. Filling it out correctly allows you to reduce the U.S. tax withholding rate from 30% to 10%, 5%, or even 0%.

Let's break down step-by-step what information is required here.

Step 1: Specify Your Country of Tax Residence

The first thing you need to do is specify the country where you are a tax resident. This field is the foundation for applying for benefits.

• What to write: Enter the full name of the country where you live and pay taxes.
• Why it's important: Tax benefits are only possible if there is a double taxation treaty between your country and the U.S. Without this, you cannot claim a reduced rate.

Step 2: Reference the Specific Treaty Article and Type of Income

Simply stating the country is not enough. You must precisely justify your right to the benefit by referencing specific provisions of the tax treaty. To do this, you need to provide three key elements:

Treaty Article and Paragraph

Each tax treaty has articles that regulate different types of income (e.g., business profits, royalties, dividends, interest). You need to find the article that applies to your specific type of income. For services (freelancing, consulting): This is usually an article titled 'Business Profits' or 'Income from Independent Personal Services.' For royalties (selling photos, books, music): Look for the 'Royalties' article.

Preferential Tax Rate (%)

The same treaty article will specify the tax rate that can be applied to your income. For services: In most treaties, this rate is 0%. For royalties or dividends: The rate can be 5%, 10%, or another percentage.

Type of Income

Clearly describe the type of income for which you are requesting the benefit. Be as specific as possible. Examples: 'Software development services,' 'Consulting services,' 'Royalties for photographic images.'

Step 3: Explain Additional Conditions (If Necessary)

Sometimes, to apply for a benefit, you must meet additional conditions described in the treaty article. If such conditions exist and you meet them, this field is for their brief description. For most freelancers providing services, this field remains empty.

Example of How to Fill It Out

Let's imagine you are a freelance designer. In the form, it might look like this (this text is an example of the logic, not a literal filling): Line 9 (Country): [Your Country's Name]. Line 10 (Special rates and conditions): As a resident of [Your Country's Name], I claim a 0% rate on income of the type 'Design services' under Article 7 (Business Profits) of the tax treaty.

Not sure which article or rate to choose?

• This is the hardest part to do on your own. A mistake can cost you 30% of your income. It is precisely to solve this problem that we created our service.

Our online builder with an AI assistant automatically analyzes your type of activity and helps you choose the correct treaty article and tax rate.