Continuing in this series of the Top 10 FAQs that UKTI receives, we’ll explore the next topic of UK/US trade:
Whether you’re attempting to set up a business in the United States or are ready to conduct business here, UK companies are subject to U.S. tax regulations.
Please note that as a UK government agency UKTI is unable to provide legal advice including how to complete tax forms or details of treaties between the US and the UK. Any information provided here is strictly the result of secondary research and should be treated as such. The US tax system is an ever-changing complex set of rules, and it is highly encouraged to contact the IRS directly to verify the information and to answer any additional questions you may have on the process. I suggest you do this before speaking with the US companies about these considerations.
On that note, please see the Top 4 tax enquiries we receive at UKTI and where you can find further information:
1. What is governing body for tax regulation?
The Internal Revenue Service (IRS) is the federal tax collection agency of the United States and administers the Internal Revenue Code enacted by Congress.
Internal Revenue Service
24/31 Grosvenor Square
London W1A 1AE
Tel: +44 207 894 0476
2. Is there VAT?
No, sales tax is collected by states, not the federal government. You would need to speak with the appropriate agency in which ever state you establish a business presence.
Here is the link to sales tax offices by state: http://www.taxadmin.org/fta/link/ (under the map, each state has a link to the appropriate office) and state tax rate tables. Be sure to contact a certified accountant or attorney to oversee your individual tax situation.
3. What is W-8BEN?
In general, the W-8BEN form is required to be completed by a foreign supplier (UK company) and returned to the US company so that it can include the form with its federal tax return.
Please a look at the below IRS websites which offers detailed information about the W-8BEN form:
PDF Form: http://www.irs.gov/pub/irs-pdf/fw8ben.pdf
Complete information on the W-8 forms here: http://www.irs.gov/instructions/iw8/index.html
W-8BEN-E Note: http://www.irs.gov/Businesses/NOTE-to-Users-of-Form-W-8BEN
4. What is a TIN/EIN?
There is a box on the W-8BEN and W-8ECI forms for a TIN (Taxpayer Identification Number), also known as an EIN (Employer Identification Number), which is a US tax ID for businesses.
For more information see: TIN http://www.irs.gov/Individuals/International-Taxpayers/Taxpayer-Identification-Numbers-(TIN)
IRS Publication 515: Withholding of Tax on Non-resident Aliens and Foreign Entities
IRS How to Apply for an Employer Identification Number (EIN)
IRS SS-4 Form to Apply for an Employer Identification Number (EIN)
IRS W-8 Forms and Instructions for Foreign Companies and Governments
UK Tax Treaty Documents
UKTI has partnered with a New York-based firm to produce a Tax Considerations publication, which can be downloaded from the UKTI USA Publications page as an initial guide to U.S. taxes.
TD Bank has produced this helpful guide on how to complete a W8-BEN form: http://www.tddirectinvesting.co.uk/help/faqquestions/how-do-i-complete-a-w-8ben-form/
These resources are intended as an initial guide to U.S. tax regulations; each situation is unique and may require review on a case-by case basis to ensure compliance. Please visit the IRS website for the most accurate information to date, in addition to consulting a qualified trade lawyer.
Hope you find this useful.
Updated on 29 September 2014.
Originally published on 15 August 2013.