Tax News
W-8BEN-E Instructions are Released – Tax Policy Meets Reality
June 26, 2014
Administrative Actions
In my last post regarding W-8BEN-E, I observed that some foreign businesses were in a predicament because withholding agents started asking for the form but there were no instructions. I asked "for how long" will this continue and the IRS answered - until June 24th.  Aside any jokes that the IRS is actually taking queue from my blog posts, as practitioners had hoped, the IRS released instructions before the July 1st FATCA deadline. As a lawyer, I don’t do much reporting and I would not comment on the intricacies of the form. However, I have a few practical observations.  I personally counted close to 30 Treasury Regulation cross-references in the 15 page instructions. For the less mathematically inclined, this is 2 per page, on average. As we know, the form has to be filled by foreign persons. As we also know, the form may have to be supplied not only to U.S. withholding agents, but also to FFIs. Not only that, but the form may have to be supplied to some FFIs that have nothing, or very little, to do with the US.  So, how is this going to work in practice? Well, to continue the theme I started with my last post, if we have on one hand a U.S. withholding agent who has the resources to wade through the instructions, the regulations and the tenets of FATCA, and if we have on the other hand an FFI who has similar resources and desire to accurately comply, then at least on theory you have a successful and effective double-reporting.

Now, let’s take an entirely foreign-to-foreign set up where we have a French entity investor in a German fund. Unless the fund jurisdiction has some “similarly agreed” to W-8BEN-E form under an IGA, or unless someone like the OECD comes up with a self-certification non-W-8 form translated into various languages, it is safe to assume that the French investor will be completing and submitting to the German fund a U.S. form, written in English with instructions written in English (without an official translation), with about 30 cross-references to U.S. regulations that are difficult to tackle by U.S. speaking counsel of the most astute caliber. You see where I am going with this. In some instances you will have diligent parties with the resources and desire to complete the form. In most, given the above set up, I’d make a wild guess that self-certification compliance will be unreliable.  The separate issue here is to what extent can the U.S. hold either party accountable for erroneous compliance, or a hypothetical U.S. investor somewhere up the chain of the French investor.   Maybe all of this will sort itself out somehow. As of now, I am not entirely clear how, particularly for non-OECD, non-IGA countries.
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Tags: FATCA, FATCA compliance, W8-BEN-E