Nothing in this Tax FAQ is intended or written to be used by any person, or can be used by any person, for the purpose of avoiding any income tax penalties that may be imposed under the Internal Revenue Code. You should seek advice from your financial or tax advisor or the IRS about your individual situation as the information below does not constitute professional advice.
Why am I being asked to complete a W-8BEN?
Payments of U.S. source income from the U.S. to foreign non-residents require a 30% withholding tax unless a W-8BEN has been provided. (A W-8ECI is also acceptable if you are claiming the payments are connected with a U.S. business operated by you or in which you are a partner. Please visit www.irs.gov for details or consult your tax advisor.) Completing a W-8BEN allows you to claim tax treaty benefits that can reduce or eliminate the 30% withholding requirement. By completing the W-8BEN you can ensure that the lowest possible withholding tax rate is applied to payments made to you. Though many countries have a tax treaty with the U.S. that provides for zero withholding on payments to you, there are also a number of countries where the 30% withholding (or lower rate) may still apply even if a W-8BEN is provided.
What happens if I do not complete a W-8BEN?
We can hold payments entirely until you are able to provide a completed W-8BEN if you prefer. However, if you wish to receive immediate payment and we do not receive a valid W-8BEN from you we must apply a 30% withholding to all payments made. The 30% withholding will be remitted to the U.S. Internal Revenue Service (“IRS”). If a tax withholding is made and you are eligible for treaty benefits that reduce or eliminate the withholding tax you can still file a claim for refund of the withheld funds by filing the appropriate tax return with the IRS. Foreign persons may make claims for a refund by filing Form 1040NR, U.S. Nonresident Alien Income Tax Return or Form 1120-F, U.S. Income Tax Return of a Foreign Corporation. These forms must be filed with the IRS, not with Kongregate. More information can be found in Instructions for Form 1040NR, Instructions for Form 1120-F, IRS Publication 901, U.S. Tax Treaties, and IRS Publication 519, Tax Guide for Aliens. See www.irs.gov for more details. Please note, we will provide both you and the IRS with an IRS Form 1042-S each year, which will provide detail regarding U.S. taxes withheld and remitted to the IRS during that year.
Do I need to send you a physical W-8BEN?
No, we have an electronic W-8BEN integrated into your payment options screen. If you fill that out fully we have everything we need.
I am a developer and have never completed a W-8BEN but still received full payments with no withholding from other companies. Why do you require a W-8BEN when others do not?
Some payments from the U.S. are exempt from the 30% withholding requirement and do not require a W-8BEN. Generally, payments for services provided entirely in a foreign country are not considered U.S. source income and are not subject to withholding. Payments for Kongregate game sponsorships are also generally not considered to be U.S. source income. However, payments that represent royalty income generated in the U.S. and paid by a U.S. company are considered U.S. source income. Such payments are not exempt and require 30% withholding unless a valid W-8BEN or W-8ECI has been provided and the relevant tax treaty allows for a lower royalty withholding rate.
Am I required to provide a U.S. tax identification number under line 6? I'm not a U.S. citizen or resident.
Not any longer! In order to claim tax treaty benefits, however, a tax identification number must still be provided on form W-8BEN. This may be the tax ID issued to you by your native country if there is a tax treaty in effect between our two countries. A tax id allows the IRS to establish both the identity and residency of foreign entities and nationals. We are required to withhold tax at the 30% rate if this information is not provided.
How do I get a U.S. tax identification number if I do not live in the U.S.?
NOTE: This is no longer required if you have a tax ID number issued by your government (see above)
The following sections provide an overview of the requirements for obtaining a U.S. taxpayer identification number. This information was taken directly from the IRS website and the instructions for certain IRS forms. This information and the relevant U.S. tax requirements and forms can change at any time and you should always refer to the IRS website for current information. We do not represent or warrant that the information in this FAQ is current or complete. The information provided here does not constitute professional tax advice and you should seek advice from your financial or tax advisor or the IRS about your individual situation.
Applying for an Employer Identification Number (Foreign Corporations, etc)
Foreign entities that are not individuals should file Form SS-4 for the purpose of obtaining an Employer Identification Number in order to claim a tax treaty benefit.
As noted on Page 2 of Form SS-4, a foreign entity needing an EIN to comply with IRS withholding regulations is only required to complete certain lines as follows: 1–5b, 7a–b (SSN or ITIN optional), 8a, 8b–c (if applicable), 9a, 9b (if applicable), 10, and 18. Any question or line that does not apply should be noted with an “N/A”. When answering Question 10, the “Other” box should be checked and something similar to the following should be noted immediately beside the “Other “ box: “To obtain a reduced rate of withholding pursuant to an income tax treaty”. Please see the instructions for Form SS-4 and the IRS website for additional information.
To expedite the issuance of an EIN for a foreign entity, please call (267) 941-1099. This is not a toll-free call. An EIN may be able to be assigned immediately over the phone.
Applying for an Individual Tax Identification Number
Please note that this is no longer a requirement for individuals living in countries with tax treaties with the U.S.; your native country tax ID will be sufficient.
Foreign individuals filing Form W-7 for the purpose of obtaining an ITIN in order to claim a tax treaty exemption and which otherwise have no requirements to file a U.S. income tax return should comply with the following special instructions when filling out Form W-7. Please also see the instructions for completing Form W-7 available on the IRS website.
Under “Reason you are submitting Form W-7” check boxes a and h. Under the dotted line next to box h, enter “Exception 1d-Royalties”. Also enter the name of the treaty country and treaty article number in the appropriate entry spaces below box h and attach a signed letter from Kongregate showing your name and verifying than an ITIN is required to make distributions to you during the current tax year that are subject to U.S. tax withholding. Please email email@example.com to request a signed letter. Additional information regarding U.S. income tax treaties can be found on the IRS website.
You will also need to attach original copies or certified or notarized copies of documents proving your foreign status and identity. The supporting documentation must be consistent with the information provided on Form W-7. For example, the name, date of birth, and country(ies) of citizenship must be the same as on Form W-7, lines 1a, 4, and 6a.
If you are planning on filing a tax return to reclaim withheld monies, these documents must be original or certified copies (not notarized). For more information, please refer to this page.
If you submit an original valid passport (or a notarized or certified copy of a valid passport), you do not need to submit any other documents to prove your foreign status or identity. Otherwise, you must submit at least two of the documents listed in the chart below. The documents must be current, verify your identity (that is, contain your name), and support your claim of foreign status. If you submit copies of documents that display information on both sides, copies of both the front and back must be attached to the form W-7. At least one document must contain your photograph. Do not attach expired documents.
Please see the Form W-7 instructions for the requirements in respect to submitting copies of original documents as they must be notarized or certified to be accepted.
Form W-7 and supporting documentation can be submitted by mail or in person at certain IRS Taxpayer Assistance Centers both in the U.S. and in selected other countries. Please see the form W-7 instruction for details of “Where to Apply.”
You can also call 267-941-1000 (not a toll-free number) or contact the IRS offices (U.S. embassies) in Beijing, Frankfurt, London, or Paris for assistance or additional questions.
I don’t want 30% withheld from my payments, can you hold them until I have a tax id?
Yes, just select “waiting” in the payment method drop-down and we will hold your payments. Once you’ve received your tax id, enter it into your Form W-8 and change your payment method and we will resume payments, including all back payments, starting with the next payment cycle.