Thoughts on Form W-8BEN-E for companies selling software licenses

Your company is selling software and a customer in the U.S. is asking you for form W-8BEN-E? You should supply it or risk having 30% of your payment withheld. Some customers might also not place an order at all before receiving this form.

Disclaimer: This blog post is presented for educational and entertainment purposes only. I originally wrote the instructions below for my own company. They might be incomplete, wrong or not applicable to your situation.

Preliminary considerations

  • What are software licenses (in tax treaty terms)? For this article, I’m assuming they fall under royalties / copyright.
  • Does your country have a tax treaty with the U.S.? How much will you save by filling out from W-8BEN-E? Download table 1 (tax rates…) from this IRS page, find your country and look up the royalties / copyright tax rate:

    Luxembourg US tax treaty: royalties
    Points at Malta: Ha-ha!

Official information

Other links you might find useful

Instructions for filling out form W-8BEN-E

Part I – Identification of Beneficial Owner

Complete line 1 and 2

Check “Corporation” on line 4 (if you’re not working for a corporation, you’re probably reading the wrong blog post).

Skip line 5 (FATCA status) entirely. Software licenses are excluded from the FATCA definition of “withholdable payment” [see: Experis – Finance FATCA Checklist for Multinational Companies (PDF); EY – Information reporting and withholding: the impact of Foreign Account Tax Compliance Act (FATCA) on multinational organizations (PDF)].

Enter address on line 6.

Provide a US taxpayer identification number (TIN) in the form of an employer identification number (EIN) on line 8 or the tax ID assigned in your country on line 9b.

Part III – Claim of Tax Treaty Benefits

Line 14a: Check the box and enter your country.

Line 14b: Check the box at the beginning. Will you have to check another box below? The official instructions say:

If you are a resident of a foreign country that has entered into an income tax treaty with the United States that contains a limitation on benefits (LOB) article, you must complete one of the checkboxes in line 14b. You may only check a box if the limitation on benefits article in that treaty includes a provision that corresponds to the checkbox on which you are relying to claim treaty benefits. A particular treaty might not include every type of test for which a checkbox is provided.

To find out if your country’s tax treaty includes a LOB article (it most probably does), go to the IRS tax treaties tables page and look up your country in table 4 (limitation on benefits). You can find the complete text of the tax treaty through this page and read the articles mentioned in table 4. The official instructions for form W-8BEN-E also contain summarized versions of the LOB tests which might be useful. You should then be able to figure out which box to check.

Line 15: As far as I understood the instructions, this line has to be filled out only “if the treaty contains different withholding rates for different types of royalties.”[see IRS instructions]. Remember table 1 from the very beginning of this blog post? Look at it again. Are all royalties rates the same? If yes, skip line 15, otherwise, fill it in. As “n/a” is not a rate (I hope), I skipped this line (all rates were the same for Luxembourg).

Part XXX – Certification

Sign, fill in print name and date in U.S. format, check the box at the bottom.

Even though I really don’t want to deal with this topic again, I’ll leave the comments open so that you can correct me on all that’s wrong with my instructions. However, please don’t ask me to help you fill out form W-8BEN-E for your company!

List of co-working spaces and business incubators in Luxembourg

6zero1

Bamhaus

Dudelange Innovation Hub

Lux Future Lab

Luxembourg-City Incubator (House of Startups)

Luxembourg House of Financial Technology (House of Startups)

Maison Breedewee (featured image)

Nyuko (House of Startups)

Paladium (found on Silicon Luxembourg)

Silversquare Luxembourg

Spaces (coming in 2020)

Technoport

The Foundry (found on Delano.lu)

The Office

University of Luxembourg Incubator

Urban Office

Wishbox

Last updated June 20, 2019. Please leave a comment if you know any other co-working spaces or incubators in Luxembourg.

This is what happens when your website sucks

Here’s the first page of “search hits” from my three private blogs (hypermegaglobal.net, meltdownblog.com and krise.hypermegaglobal.net – all updated much more frequently than this one):

Search hits and keywords
All of these are from today

As you can see, most of my visitors where looking for fnapf, which is a pet supply franchise chain. That’s because I blogged about how badly fnapf‘s Luxembourgish website sucks. Not only is it configured in a way that omitting the “www.” will get you nowhere, even if you make it to their website it’s difficult to locate their biggest store unless you know where to find it on a map (or keep zooming out). This quickly became the most popular post on my blog (pathetic, I know) which means that I’m obviously not the only one who had trouble finding what I wanted on their site.

So here’s a quick reminder of the very basic content you should put on your website (examples are geared towards a brick and mortar store).

The 5 friggin’ Ws – things you should definitely put on your website

Let’s simply take the well-known 5 Ws from journalism and reinterpret them from the perspective of a website visitor looking for information (which should also get us pretty close to the perspective of a search engine trying to determine your website’s ranking). Apparently these basics are so obvious that they’re often forgotten (either that or many people just have no clue of what to put on a website).

Who?

Who are you? Example: We’re “Zombie Megastore”, Luxembourg’s leading store for all you zombie needs.

What?

What exactly is it that you do? Example: We carry a large selection of… well, maybe I shouldn’t have chosen the zombie store example. Anyhow, here’s where you list the things customers can find in your shop so that 1. they’ll find you when searching for your city + a certain item or brand on a search engine and 2. they don’t have to call and ask if you sell product XYZ item before taking the trip to your store.

When?

Opening hours. If you’re closed on certain days, put this on your website. If you’re closing your shop for vacation, put this on your website (yes, I’m looking at you, Luxembourgish shop and restaurant owners who like to take long summer vacations).

Where?

Your address (you might want to include your phone/fax number, email, link to contact form, etc.).

Why?

This is the place where you might think you’ll have to come up with a wonderful story to justify why you’re doing what you do (“when my grandfather turned into a zombie, I realized there was no shop where I could buy thinks to make his… uhm… ‘life’ just a bit better”). That’s cute, but I suggest staying with the customer perspective and just answering the old basic “why should I buy from you”-question. It can be as simple as “we are the biggest store for zombie supplies in the entire state”.

That’s it, the basics. Of course a website can do much more than just answering these questions, but not answering them means you’ll lose potential visitors/customers every day.

What Google and Mr. Burns have got in common

They’re both old fashioned.

I discovered this when receiving my first Google Adsense check from Google’s bank in Germany. This sort of intra-EU payment might have been “cutting edge” a century ago. Nowadays it’s just odd and annoying, because I have to leave the office during the very restricted opening hours of my bank to cash the check, which costs me €15 in fees (or about a week of Adsense revenue). Someone at Google should look up Regulation (EC) No 2560/2001.

It’s not just Luxembourg, though, it appears Google doesn’t like smaller Eurozone countries and Greece (bad vacation experiences, maybe?):

StatePopulationBank transfer
Malta404,962No
Luxembourg476,200No
Cyprus766,400No
Slovenia2,013,597No
Ireland4,239,848Yes
Finland5,289,128Yes
Slovakia5,389,180Yes
Austria8,316,487Yes
Portugal10,599,095Yes
Belgium10,666,866Yes
Greece11,125,179No
Netherlands16,471,968Yes
Spain45,116,894Yes
Italy59,131,287Yes
France63,392,140Yes
Germany82,314,906Yes

Population data from Wikipedia

Luxembourg: Referral recruitment on the web

Do your friends like to complain about their jobs? Do you sometimes think they should pay you just for listening to them? Well, x-change.lu can’t do that, but if you use this new recruiting website to find a job for someone else you can earn between 250 and 5000 €! (Yes, we’re talking about regular jobs in Luxembourg here and not about signing up with some mercenary organization)

Here’s a demo showing how it’s supposed to work (in French only, like the entire website).

Hat tip to business review (print edition May 2008).