Is there any Form like the From W-8BEN for foreign company?

[PDNEP]

Form W-8BEN is for foreign "individuals". But I (Self-employed) had a foreign "company"' which I paid for their help for my project. Is Form W-8BEN-E the one I should use for foreign company? If someone could help me regarding this, your help is much appreciated.

[pk]

@PDNEP , if the foreign  company worked  on foreign land, even though you paid  from US sources,   all you do is show it as expense on your schedule- C.  The foreign entity  then would   claim this income on their  filings to  local taxing authority .  Us generally does  no and cannot  tax this foreign entity.    This is active income.  Foreign person having passive income form US sources  are indeed taxed  and generally get a 1042-S from the withholding agent and would report to their home country as foreign income and taxed at source ( USA).

Does this help ? 

[PDNEP]

Thank you very much for your explanation. I understood "Where they will be taxed" clearly.

 I learned that I need to ask our foreign contractors to complete this form W-8BEN as a record to prove that they are not U.S. taxpayer. For the reason we are not issuing 1099-MISC for our foreign contractors.

(We usually issue the form 1099-MISC for any payment to contractors when we report it as our business expenses, but we are not issuing 1099-MISC for our foreign contractors because it is not required if they are not U.S. taxpayer. )

or are the forms W-8BEN and W-8BEN-E not for self-employed like me?  Are these forms for the U.S. companies who have contractors in foreign countries?

[pk · Accepted solution]

@PDNEP   there two kinds of  requirements regarding payments to NRA ( Non-Resident Alien )--- withholding requirement and  Reporting Requirements and generally require the use of  W-8BEN series  and 1042 series of forms.  IRC section 1441 through 1443.   Publication 515 details all these requirements.

In your particular case  --- you need to determine  if the income paid to foreign person is  " US sourced/connected " income .  

Here is a short part of the table  providing guidance  on income sourcing:

Summary of Source Rules for Income of Nonresident Aliens

Item of Income	Factor Determining Source
Salaries, wages, other compensation	Where services performed
Business income: Personal services	Where services performed
Business income: Sale of inventory -purchased	Where sold
Business income: Sale of inventory -produced	Where produced (Allocation may be necessary)

  As you see from the table  for "services performed " by an NRA  it is the  "where" that rules prime.  Thus the contractor doing the work for you  in a foreign land  is a foreign person ( NRA )  but his/her income is not US sourced / connected for purposes of section 1441/1443. 

for ref see this  -->https://www.irs.gov/individuals/international-taxpayers/nra-withholding

Therefore my conclusion that you have no reporting nor withholding requirements  for this NRA payments

[PDNEP]

Thank you very much for all the details.

We truly appreciate the information given!