We need to process an international wire transfer for a conference in St. Maarten. The foreign concierge vendor partially completed Form W-8BEN, and are claiming a tax treaty benefit. Are they subject to 30% withholding?

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We cannot completely answer your question, but can provide some guidance regarding the W-8 form (we are looking into the tax treaty situation). This appears to be a chapter 3 payment and not subject to FATCA (chapter 4).

The first question is, what is the source of the income to the concierge? The source of services is where the services are performed. So where did the concierge provide its services?  If it provided services within the U.S., then you do have a reporting and possibly withholding responsibility.  However, if the concierge is in St. Maarten and provided its services (did its work for you) in St. Maarten, then the payment is non-U.S. source income and you do not have to report or withhold.

If the payment is U.S.-source income, did the vendor provide the W-8BEN 2006 version to you on or before 12/31/2014?  If not, i.e., if they provided the W-8 to you 1/1/15 or after, you can no longer accept the 2006 version. They will have to complete and submit the new 2014 W-8BEN-E.  

Also, the form must be signed. If it’s not signed, request a new signed form—which now must be the new W-8BEN-E.

There is a tax treaty between the U.S. and the Netherlands. However, we are not certain whether St. Maarten is covered by this treaty.  You might wish to contact your tax accountants or attorney.

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