What is a Certificate of Foreign Status (tax Form W8 BEN/BEN-E)? Why do I need to provide this?

All US payment processors, including PayPal, are required by the US Internal Revenue Service (IRS) to provide information to the IRS regarding account holders who receive payments for the sale of goods or services.

In order for PayPal to satisfy its information reporting obligations under IRS rules and regulations, we require that PayPal account holders (globally) who approach the applicable thresholds ($20,000 USD and 200 transactions) set by the IRS verify their U.S. tax status either by completing a certificate of foreign status or providing a US taxpayer identification number (TIN).

Here’s how to provide your taxpayer status:

When applicable, you will be notified by email and an alert notification to the ‘confirm your U.S. taxpayer status’ dashboard to answer the questions to complete a certificate of foreign status.

  1. When prompted, log in to your PayPal account.
  2. Click on the notifications icon.
  3. Follow the instructions provided.  

You should read and review the certification or form before signing it with either your electronic signature or written signature. False statements may lead to penalties under applicable law.  If you have any questions or concerns regarding the form, it may be beneficial to engage tax counsel.

You can find more tax related information on the PayPal IRS tax website.