Operational Taxes update: New W-8 series forms – are you ready?

By Vicky Yen, Troy Andrews & Sam Kettle

The US Internal Revenue Service (IRS) has recently released new versions of certain W-8 series forms and instructions.

These forms are used by financial institutions to obtain self-certifications from account holders on their tax residency status and eligibility to claim treaty benefits under a U.S double tax agreement, and also to be documented for FATCA. These forms are used by financial institutions around the world, including in New Zealand (especially if they are a Qualified Intermediary). To date, new versions (Rev. October 2021) of Forms W-8BEN-E, W-8ECI, and W-8BEN and instructions have been released. The new version of Form W-8IMY is currently still in draft.

From 1 May 2022, financial institutions will only be able to accept the new Rev. October 2021 versions of these forms. Until then, the previous version can still be completed by account holders and accepted by financial institutions, these continue to be valid until their expiration date, or until a change in circumstances causes them to become invalid, under the usual validity rules.

• Agreeing within the business on a transition timeline (when to stop sending out, and when to stop accepting the prior versions of the forms).

• Updating documentation collection and review / validation procedures. These procedures generally sit outside the tax function, so may require communication with a broad range of stakeholders including client onboarding teams and third-party service providers.

• Updating internal controls (whether manual or automated), and customer relationship management systems or other relevant systems’ data fields.

• If substitute Forms W-8 are utilised (forms which are “substantially similar” to the official forms issued by IRS) these should be updated to ensure they remain compliant.

Key changes between the versions have been summarised in IRS’s new form instructions. These include updated disclosure options on jurisdictions where foreign Tax Identification Numbers are not legally required, persons who are completing the form on behalf of others, and jurisdictions without a limitation on benefits article in the relevant US treaty. The form instructions also provide updated guidance on electronic signatures, withholding in relation to transfers of interest in publicly traded partnerships, and on claiming treaty benefits for profits or gains not attributable to a permanent establishment.

Financial institutions should review the updates and ensure their relevant teams have a good understanding on the changes and their impact. This may also be a good opportunity for financial institutions to perform a wider review of their policies and procedures to ensure compliance on account holder documentation collection, validation, monitoring, and reporting for FATCA / CRS and Qualified Intermediary purposes.

If you require any assistance in this area or have questions regarding the updated Forms W-8, please contact the Deloitte team.

November 2021 Tax Alert contents