While we cannot provide you with tax advice, we have put together this article to help you through the process. This has the caveat that you should always seek advice from a professional accountant/tax advisor because we are not authorized to advise about your specific tax situation, including filling out your specific tax form.
Non-US are required to complete a standard IRS form called Form W-8BEN (for individuals) which includes some basic information about you, including your Foreign Tax Identification Number (TIN) and country of residence.
The purpose of the Form W-8BEN is to establish your identity and status as a non-U.S. person.
Each team member of a winning bounty / track prize, must provide their own KYC, details, and tax information.
Generally, winning prizes at a hackathon is considered "other income." If you are a non-US, your earnings are subjected to a withholding tax of at least 30%.
US tax law provides that the US payor may collect taxes for US source other income. Other income is considered to be US sourced when the earnings is made by a person residing within the US.
Accordingly, if you are a non-U.S. person, your winnings to US may be subject to other income withholding tax of up to 30%.
However, if you are a resident of a country that has an income tax treaty with the U.S., you may be eligible for a reduced withholding tax rate. The full text of these treaties can be found on the IRS website.
A list of the applicable treaty "Other Income" withholding tax rates can be found here. The applicable rates applied are based on the Other Income Article classification.
Note: Any tax withheld will be remitted to the IRS - and not held by ETHDenver or it's Sponsors.
How to Complete a Form W-8
Tax Form W-8BEN - for Non-US Individuals
The first section of the form asks you for your personal details. In this section, please provide details including your name, country of citizenship and postal address in your country of residence.
It also asks for your tax identification type and number. You may provide your Foreign Tax ID Number, which is the number that you use when you submit your tax return or pay taxes in your country.
If your country is recognized by the OECD your tax ID is required. If your are unable to provide your tax identification number you won’t be able to claim a tax treaty benefit and your earnings from ETHDenver will be subject to 30% withholding rate.
In the second part of the form, if you’re from a country that has a treaty with the US you’ll need to fill out the treaty article number and tax rate relevant to your country. You can view the table here. You can also view the the IRS website. If your country is not on this table, that means your country likely does not have a treaty with the US.
To find out details on how each country works with the United States, please review the IRS website:
If you’re from a country that doesn’t have a treaty with the US you will not have to fill out this part of the form, it needs to remain blank.
You should verify with your tax professional what should be written.
Special rates and conditions (if applicable—see instructions): The beneficial owner is claiming the provisions of Article and paragraph 8_ of the treaty identified on line 9 above to claim a 0% rate of withholding on (specify type of income): other income.
Explain the additional conditions in the Article and paragraph the beneficial owner meets to be eligible for the rate of withholding: The beneficial owner of the other income, being a resident of Poland, does not carry on business in the United States through a permanent establishment situated therein and, therefore, such other income shall be taxable only in Poland.
In the final section of the form, you’re required to certify the information you’ve provided is correct.
Please make sure you understand all the items under this section. The purpose of the Form W-8 is to establish your identity and status as a non-U.S. person, that you are the beneficial owner of the income and whether a lower rate of withholding applies as the result of a treaty claim. Even if your country does not have a treaty with the US, the form is used to establish that you are not a U.S. person.
You will also need to acknowledge the certification and provide your name as an electronic signature.
If you would like to understand how to fill it out, here is a great video resource. The information in this video is based on the country India, but you might be able to replace India with your country if you have a treaty. Again, make sure you talk with a accountant or tax specialists.