Why do I need to complete a Certificate of Foreign Status (CFS)?
Payment processors such as PayPal are required to file annual information returns (Forms 1099-K) with the U.S. Internal Revenue Service (IRS) for each accountholder/payee who receives payment(s) for the sale of goods and services above the reporting threshold in a calendar year ($600 USD for 2023) and is considered a U.S. tax resident. Non-U.S. tax residents aren't subject to such reporting.
Non-US CFS Accounts (For accounts held outside of the U.S. and not with PayPal Inc.):
To satisfy our IRS reporting obligations, we require PayPal accountholders/payees with U.S. indicia (i.e., a U.S. address, a U.S. bank account, or other U.S. persona) who approach the applicable reporting threshold to confirm their U.S. tax status either by completing a Certificate of Foreign Status (CFS) or providing us with their U.S. Taxpayer Identification Number (TIN).
We collect the CFS instead of an IRS Form W-8BEN or Form W-8BEN-E on non-U.S. accounts to help establish an accountholder/payee’s non-U.S. tax residency status. The Certificate of Foreign Status is generally valid for three years. Before expiration, we proactively contact accountholders/payees through email and account notification when their Certificate of Foreign Status needs to be recertified.
If an accountholder/payee doesn't certify their tax status, they may experience delays in the processing of payments received for the sale of goods and services and could be subject to backup withholding (24%) deductions.
US CFS Accounts (For accounts held in the U.S. through PayPal Inc.):
To satisfy our IRS reporting obligations, we require PayPal accountholders/payees within the U.S. who approach the applicable reporting threshold to confirm their U.S. tax status either by completing a Form W-8BEN, W-8ECI, or W-8BEN-E or providing us with their U.S. Taxpayer Identification Number (TIN).
We collect FORM W-8BEN, W-8ECI, or W-8BEN-E for accounts in the U.S. to help establish an accountholder/payee’s non-U.S. tax residency status. Form W-8 is generally valid for three years. Before expiration, we proactively contact accountholders/payees through email and account notification when their Form W-8 needs to be recertified.
If an accountholder/payee doesn't certify their tax status, they may experience delays in the processing of payments received for the sale of goods and services and could be subject to backup withholding (24%) deductions.
Here’s how to provide your taxpayer status:
When applicable, you'll be notified by email and alert notification to go to the ‘confirm your U.S. taxpayer status’ dashboard to answer questions regarding your tax status.
- When prompted, log in to your PayPal account.
- Click on the notifications icon.
- Follow the instructions provided.
Read and review the certification before signing it with your electronic 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 contact a tax advisor.
If you're unable to complete the certification process when prompted, or if you'd like to complete it proactively:
Non-US CFS Accounts:
Complete the Certificate of Foreign Status by filling out CFS form for individuals or CFS form for legal business entities.
US CFS Accounts:
Certify your foreign status by filling out Form W-8BEN or W-8ECI for individuals or Form W-8BEN-E or W-8ECI for legal business entities.
Please upload your completed form in the Notifications section of your PayPal account. Once the form has been uploaded, we will review it and contact you if any further action is needed to restore full access to your PayPal account. If you cannot perform these steps, log in to your PayPal account and click the Help link in the top right corder of any PayPal page.
If you're unable to complete the certification process when prompted, or if you'd like to complete it proactively:
Non-US Customers with a Non-US PayPal Account:
Complete the Certificate of Foreign Status by filling out the CFS form for individuals or the CFS form for legal business entities.
Non-US Customers with a US PayPal Account:
Certify your foreign status by filling out Form W-8BEN or W-8ECI for individuals or Form W-8BEN-E or W-8ECI for legal business entities.
Upload your completed form in the Notifications section of your PayPal account. Once the form has been uploaded, we will review it and contact you if any further action is needed to restore full access to your PayPal account. If you cannot perform these steps, log in to your PayPal account and click the Help link in the top right corner of any PayPal page.
You can find more tax-related information on the PayPal IRS tax website.