We have a W-8 from a corporation based in Stockholm but the mailing address is NY. They provided both the U.S. TIN and the foreign ID; the beneficial owner is a Swedish resident, who is the owner of U.S.-generated royalties. Is this a foreign vendor?


From the information provided, it does sound as though most likely you should set up this entity as a foreign vendor. Is the W-8 an ECI or a BEN-E? (Or did you receive a W-8IMY with documentation as to the beneficial owner?)

Royalty payments are subject to withholding and reporting—if the vendor is foreign, reporting is on a 1042-S. Withholding may be excluded if the company is claiming exemption on the W-8BEN-E under the U.S./Sweden tax treaty (see Article 12 for Royalties). The corporate exemption does not apply for foreign corporations.

If the vendor has a permanent presence in the U.S. and has submitted a valid W-8ECI with a U.S. TIN (and is paying taxes in the U.S.), then withholding is not required, though reporting on the 1042-S is. If the vendor does not have a presence in the U.S., then withholding depends on a valid tax treaty claim to except it from withholding; report the payments on the 1042-S in any case.

Here are a few articles explaining the various W-8 forms and foreign reporting.

The Who What and Why of W-8
Error-Free Payments to Non-U.S. Persons
Guide to Foreign Payments

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