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I am an Indian citizen and employed by a legal entity incorporated in India. The parent company of this legal entity is a U.S. bank.

Recently, all employees received a notification that since the parent company is a U.S. entity, it’s required to keep a record of all U.S. citizens employed by itself and its subsidiaries. Employees have to either fill out a W-9 or a W-8BEN.

I understand that W-8BEN is needed to be filled if I get some income from a U.S. entity in terms of property, interest, or dividends. However apart from receiving an Indian salary from an Indian legal entity, for which I pay Indian taxes, am I still required to fill out the W-8BEN form?

The only connection between me and the U.S. is that I work for an Indian subsidiary of a U.S.-based company.

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Dr. Sarwate's answers the need for the W-8BEN, and that's the answer you are looking for.

However, the W-8BEN is only required if the US company is paying you directly (i.e. you appear on the US company's payroll accounts).

This would be weird, in general, because US companies very quickly incorporate as a private entity in a foreign land.

For example, I expect your "US Bank" to become a separate "US Bank India Private Limited" company in India and reap the various tax subsidies India offers to new companies being setup in India.

I also expect you to get paid from and employed by "US Bank India Private Limited" instead of "US Bank".

In this general case, the requirement to fill the W-8BEN seems like a H.R. goof-up or paranoia.

Yet, there could be some specific cases, where you, even as an employee of "US Bank India Private Limited" might get paid by "US Bank".

One of those specific cases could be bonuses. I came across this situation years ago when I got a monetary bonus for "Ship IT" and "Great People Great Performance" Awards and had to fill out the W-8BEN as the money was paid off a central fund in the U.S. account.

In either case, filling out the W-8BEN seems to have been mandated by the H.R. and there is no US tax impact on you for filling it out. In case taxes are with-held, they would be in error, but you would have to do all the paperwork.

  • You are right, I am employeed by US Bank India PVT LTD that is fully owned subsidary of US Bank. Hence I feel that W-8BEN is not applicable to me. No the US Bank does not pay bonus. It is paid by US Bank India PVT ltd. – Dheer Apr 18 '12 at 9:35
  • Then it looks like a major H.R. goof-up! (or paranoia?) – f1StudentInUS Apr 18 '12 at 16:14
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W-8BEN is used to tell the US Company that you are neither a US citizen nor a resident of the US, and so the US company should not withhold US taxes on any direct payments that it might possibly make to you in the future. The US Internal Revenue Service does not automatically receive a copy of this document when you submit it to the US company. However, the company will show this paper to the IRS if the IRS ever asks how come no tax was withheld on a payment to Dheer. Without this piece of paper on file, if the US company withholds US tax on a payment to you (if at all such a payment ever occurs), you will have to file a US tax return to get the money back from the IRS.

  • But W-8BEN is for payments of dividends, property etc. The Indian company pays me salary. I do not get any dividends, etc. So in effect there is no question of this arising. – Dheer Apr 18 '12 at 9:37
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    If the request for W-8BEN came from what @f1studentinUS refers to as "US Bank", you could simply ignore the request on the grounds that they have no right to ask for that information. If it came from your employer "US Bank India Private Limited", then you need to ask them why they need the information, and if you feel that asking for that information is an illegal invasion of your privacy, either persuade your employer to cancel the request or decline to complete the W8-BEN form for your employer. In the latter case, hope that the courts side with you if you are dismissed for this (in)action. – Dilip Sarwate Apr 18 '12 at 12:01

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