What Is Form W-8ECI and Who Needs to File It?

Form W-8ECI, “Certificate of Foreign Person’s Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States,” is an Internal Revenue Service (IRS) document. It is used by foreign individuals or entities to declare that certain income they receive from U.S. sources is directly related to their business activities within the United States. The primary function of this form is to claim an exemption from the standard 30% tax withholding that U.S. payers are required to deduct from payments to foreign persons.

Determining if Form W-8ECI is for You

The core concept of Form W-8ECI is “Effectively Connected Income,” or ECI. This term refers to income earned by a foreign person or entity that is directly linked to the operation of a trade or business within the United States. For instance, if a foreign individual performs personal services, such as consulting or freelance work, while physically in the U.S., the payment for those services is considered ECI. Similarly, profits generated by a foreign-owned business that has a physical presence and active operations in the U.S., like a retail store, is also ECI.

This classification is distinct from other types of U.S. source income that are not considered ECI. The most common examples of non-ECI income are passive investment earnings, known as Fixed, Determinable, Annual, or Periodical (FDAP) income. This category includes dividends from U.S. stocks, interest from U.S. bank accounts or bonds, and royalties, provided they are not connected to a U.S. business.

You should use Form W-8ECI only if you are a foreign person or a foreign entity that is the beneficial owner of U.S. source income that qualifies as ECI. If you are a U.S. citizen or resident alien, you would use Form W-9 to certify your tax status. Foreign persons who receive only non-ECI use Form W-8BEN (for individuals) or Form W-8BEN-E (for entities) to claim foreign status and any applicable tax treaty benefits.

Information and Documentation to Complete Form W-8ECI

Before you begin filling out the form, gather all the necessary information to ensure accuracy. You will need:

• Your full legal name, or the legal name of your organization
• Your country of citizenship or organization
• Your entity type if you are not an individual
• Your permanent residence address (which must be outside the U.S.)
• Your mailing address if it differs

A U.S. Taxpayer Identification Number (TIN) is a mandatory requirement for this form. This number can be a Social Security Number (SSN), an Individual Taxpayer Identification Number (ITIN) for those not eligible for an SSN but with a U.S. filing requirement, or an Employer Identification Number (EIN) for business entities. You must also provide your Foreign Tax Identifying Number (FTIN) if your home country issues one.

The form has two main sections. Part I is for your identification information, where you must also list the specific items of income that are effectively connected with your U.S. business activities. Part II is the “Certification” section, where you attest under penalties of perjury that the information provided is true, correct, and complete.

Submitting the Form and Next Steps

Once you have accurately completed and signed Form W-8ECI, you do not send it to the IRS. Instead, you provide it directly to the person or entity paying you, known as the “withholding agent.” A withholding agent can be a company, a partnership, or an individual who has control over the payment of U.S. source income to a foreign person. Your form provides the documentation they need to legally adjust the withholding on your ECI.

Upon receiving your valid Form W-8ECI, the withholding agent will cease withholding the 30% tax on the specific income items you listed on the form. The form itself remains valid for a period starting on the date it is signed and ending on the last day of the third following calendar year. For example, a form signed on September 15, 2025, would remain valid through December 31, 2028. If any information on the form becomes incorrect, you are obligated to submit a new form to the withholding agent within 30 days.

Submitting Form W-8ECI does not mean the income is tax-free; it only changes the method of tax payment. You are still required to report all your ECI on an annual U.S. income tax return. Foreign individuals must file Form 1040-NR, “U.S. Nonresident Alien Income Tax Return,” while foreign corporations file Form 1120-F, “U.S. Income Tax Return of a Foreign Corporation.” On these returns, you will calculate your tax liability on your net ECI at the same graduated rates that apply to U.S. citizens and residents.