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Withholding Statements

Definition:

A Withholding Statement is an important part of an intermediary withholding certificate (FORM W-8IMY) and provides the withholding agent with all of the information required for Chapter 3, Chapter 4, or Chapter 61 reporting and withholding.  When an intermediary, or flow through entity, provides a withholding agent with a Form W-8IMY, generally, it must include a Withholding Statement.  As such, the penalties of perjury statement provided on the Form W-IMY also apply to the Withholding Statement.

The Withholding Statement may be provided in any manner; however, the withholding agent must agree to this manner.  Certain safeguards apply when providing a Withholding Statement electronically. The withholding statement must be updated to keep the information accurate prior to each payment.
Generally, a withholding statement must contain the following information.
  • Name, address, and taxpayer identification number (TIN) (if any, or if required) of each person for whom documentation is provided.
  • Type of documentation (documentary evidence, Form W-8 series, or Form W-9) for every person for whom documentation has been provided.
  • Status of the person for whom the documentation has been provided, such as whether the person is a U.S. exempt recipient (U.S. person exempt from Form 1099 reporting), U.S. non-exempt recipient (U.S. person subject to Form 1099 reporting), or a foreign person. For a foreign person, the statement must indicate whether the person is a beneficial owner or a foreign intermediary, flow-through entity, or a U.S. branch.
  • Type of recipient the person is, based on the recipient codes used on Form 1042-S.
  • Information allocating each payment, by income type, to each payee (including U.S. exempt and U.S. non-exempt recipients) for whom documentation has been provided.
  • Rate of withholding that applies to each foreign person to whom a payment is allocated.
  • Foreign payee’s country of residence.
  • If a reduced rate of withholding is claimed, the basis for a reduced rate of withholding (e.g., portfolio interest, treaty benefit, etc.).
  • In the case of treaty benefits claimed by entities, whether the applicable limitation on benefits statement and the statement that the foreign person derives the income for which treaty benefits are claimed, have been made.
  • The name, address, and TIN (if any) of any other NQI, flow-through entity, or U.S. branch from which the payee will directly receive a payment.
  • Any other information a withholding agent requests to fulfill its reporting and withholding obligations.