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<\/span><\/p>\n The 30% U.S. withholding tax applies to payments made to foreign entities for certain passive or deemed-passive income (dividends, interest, royalties, and services performed on U.S. soil). In contrast, payments for the purchase of goods alone are\u00a0<\/span>not subject to this withholding<\/strong>. \n Chapter 3 of the U.S.\u00a0<\/span>Internal Revenue Code (IRC)<\/strong>\u00a0<\/span>imposes a\u00a0<\/span>30% withholding tax<\/strong>\u00a0<\/span>on certain U.S.-source payments made to non-resident entities or individuals.<\/p>\n This withholding generally applies to\u00a0<\/span>FDAP income<\/strong>\u00a0<\/span>(Fixed, Determinable, Annual, or Periodic income), including:<\/p>\n <\/p>\n Type of Payment<\/strong><\/p>\n<\/td>\n 30% Withholding?<\/strong><\/p>\n<\/td>\n Explanation<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/thead>\n\n Dividends from a U.S. corporation<\/span><\/p>\n<\/td>\n \u2705 Yes<\/p>\n<\/td>\n U.S.-source passive income<\/span><\/p>\n<\/td>\n<\/tr>\n Interest paid by a U.S. bank<\/span><\/p>\n<\/td>\n \u2705 Yes<\/p>\n<\/td>\n Except certain \u201cportfolio interest\u201d exemptions<\/p>\n<\/td>\n<\/tr>\n Royalties for software or trademarks<\/span><\/p>\n<\/td>\n \u2705 Yes<\/p>\n<\/td>\n U.S.-source; withholding applies<\/span><\/p>\n<\/td>\n<\/tr>\n Remote consulting fees<\/p>\n<\/td>\n \u26a0\ufe0f Depends<\/p>\n<\/td>\n If the service is performed in the U.S., may be taxed<\/span><\/p>\n<\/td>\n<\/tr>\n Sale of goods<\/p>\n<\/td>\n \u274c No<\/p>\n<\/td>\n Not classified as FDAP income<\/span><\/p>\n<\/td>\n<\/tr>\n Equipment installation on U.S. soil<\/span><\/p>\n<\/td>\n \u26a0\ufe0f Partial<\/p>\n<\/td>\n The service component may be taxable<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \n If services are rendered\u00a0<\/span>physically or economically within the U.S.<\/strong>\u00a0<\/span>\u2014 such as equipment installation, on-site training, or remote consulting directly linked to a U.S. business \u2014 they may be treated as\u00a0<\/span>U.S.-source income<\/strong>. \n In principle,\u00a0<\/span>no U.S. withholding tax applies<\/strong>\u00a0<\/span>to:<\/p>\n Why?<\/p>\n Because\u00a0<\/span>sales revenue is not considered FDAP income<\/strong>\u00a0<\/span>under U.S. tax law \u2014 it’s not passive, fixed, or recurring in nature.<\/p>\n As such, no W-8BEN-E is\u00a0<\/span>strictly required<\/strong>\u00a0<\/span>for these transactions.<\/p>\n \n In practice, many U.S. companies\u00a0<\/span>systematically require a W-8BEN-E form<\/strong>, even when it may not technically apply. Common reasons include:<\/p>\n As a result, it is often easier and safer to\u00a0<\/span>submit the form preemptively<\/strong>\u00a0<\/span>to avoid payment delays.<\/p>\n \n Form\u00a0<\/span>W-8BEN-E<\/strong>\u00a0<\/span>is intended for\u00a0<\/span>foreign (non-U.S.) entities<\/strong>. It is used to:<\/p>\n Note: This form is\u00a0<\/span>not submitted to the IRS<\/a><\/strong>\u00a0<\/span><\/a>but must be provided to the\u00a0<\/span>U.S. client or payer<\/strong>.<\/p>\n \n If the U.S. client does not receive a valid W-8BEN-E form:<\/p>\n <\/p>\n Situation<\/strong><\/p>\n<\/td>\n Recommended Action<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/thead>\n\n Sale of goods only<\/p>\n<\/td>\n W-8BEN-E not required, but may simplify processing<\/span><\/p>\n<\/td>\n<\/tr>\n Sale with associated services (installation)<\/span><\/p>\n<\/td>\n Provide W-8BEN-E and check tax treaty eligibility<\/span><\/p>\n<\/td>\n<\/tr>\n Recurring payments (e.g., license, royalties)<\/span><\/p>\n<\/td>\n W-8BEN-E mandatory with treaty reference<\/span><\/p>\n<\/td>\n<\/tr>\n Swiss company receiving U.S. dividends<\/span><\/p>\n<\/td>\n W-8BEN-E absolutely required<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \n \u201cThe invoice pertains exclusively to the sale of tangible goods, with no associated services. Therefore, the payment is\u00a0<\/span>not considered FDAP income<\/strong>\u00a0<\/span>under U.S. tax law (IRC \u00a71441) and is\u00a0<\/span>not subject to U.S. withholding tax<\/strong>. The\u00a0<\/span>30% U.S. withholding tax<\/strong>\u00a0<\/span>primarily targets\u00a0<\/span>passive or deemed-passive income<\/strong>, not commercial payments for the\u00a0<\/span>sale of goods<\/strong>. \n
Form\u00a0<\/span>W-8BEN-E<\/strong>\u00a0<\/span>allows a foreign company to certify its tax status and, where applicable, claim a\u00a0<\/span>reduced withholding rate under a tax treaty<\/strong>\u00a0<\/span>(e.g., U.S.\u2013Switzerland). While not mandatory for the simple sale of goods, the form is often requested as a precaution \u2014 and becomes essential when services are included.<\/h2>\n
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Legal Basis and Form W-8BEN-E: Chapter 3 of the U.S. Internal Revenue Code (IRC)<\/h2>\n
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Payments Subject to Withholding<\/h2>\n
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Form W-8BEN-E and U.S.-Based Services: Source of Income Matters<\/h2>\n
In such cases, the\u00a0<\/span>30% withholding tax applies<\/strong>, unless the foreign provider submits a\u00a0<\/span>W-8BEN-E form<\/strong>\u00a0<\/span>demonstrating exemption or a reduced rate under a tax treaty.<\/p>\n<\/h2>\n
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Sale of Goods: A Clear Exception<\/h2>\n
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Why Do U.S. Companies Still Ask for W-8BEN-E?<\/h2>\n
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Purpose and Scope of Form W-8BEN-E<\/h2>\n
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Risks of Not Providing a W-8BEN-E<\/h2>\n
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Practical Recommendations<\/h2>\n
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Sample Clause to Provide to a U.S. Client<\/h2>\n
However, for your administrative convenience and compliance procedures, we are enclosing a duly completed\u00a0<\/span>Form W-8BEN-E<\/strong>.\u201d<\/p>\n<\/h2>\n
However, in today\u2019s compliance-driven environment, many U.S. companies request Form W-8BEN-E\u00a0<\/span>as a default measure<\/strong>, regardless of whether it’s strictly needed.
For Swiss suppliers, it’s best to\u00a0<\/span>anticipate such requests<\/strong>\u00a0<\/span>and respond with proper documentation to\u00a0<\/span>avoid delays or unnecessary tax withholding<\/strong>.<\/p>\n<\/h2>\n
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Support from My Swiss Company SA<\/h2>\n