Payments to Foreign Entities

PCS PCard Policy only allows the use of the University PCard to purchase Tangible Items from foreign vendors for items such as goods, supplies, or equipment. 

It prohibits the purchase of intangibles (not a physical object) from foreign vendors. The IRS only requires the PCard Bank to tax report purchases from U.S. vendors. The University remains responsible for income tax reportable purchases from non-U.S. vendors. 

• Tax Services has replaced the Request for a PCard Tax Exception procedure. Effective 12/04/25. Departments do not have to obtain a PCard Tax Exception prior to purchasing an intangible from a foreign vendor.
• Subject line of the Email will be 'Tax Reportable PCard Purchases "to/from date range."
• The attached excel spreadsheet is a download of data out of Concur purchase posted in calendar year 2025 through the posted date.
• Upon request, Tax Services will provide a determination as to whether a purchase is subject to tax. Please email jgermack@uoregon.edu

 However, if your department wished, the previous procedure for PCard Tax Exception to purchase intangibles from a foreign vendor using your department can still request a PCard exception until 12/20/25. 

Beginning 12/4/2025, using posted information, Tax Services will email each University of Oregon PCard holder a monthly Concur report showing tax reportable PCard purchases from Foreign Vendors/Merchants:

The Concur spreadsheet will contain details regarding the most current previous period tax reportable purchases:

• the PCard holder's name and email,
• Last four digits of the PCard used.
• The Merchant's Name
• Merchant's City and Country
• Expense type.
• Posted Date (& Transaction Date for department tracking purposes.
• Their UO Vendor Number if it exists. If not, obtain a W-8 from vendor for A/P vendor set up
• Amount of tax is due immediately, when no W-8 formal request for treaty benefits is in University Business Affairs- A/P files.
• If tax is due, Department must provide 1>an index for the tax due; 2>a copy of the invoice that contains the Full Vendor/Merchant Name and address for Tax reporting purposes; and 3>a UO Vendor ID number.
• Please contact Joy Germack, Tax Services, jgermack@uoregon.edu with questions.

Purchases of tax reportable intangibles from a foreign vendor are subject to federal tax unless they have formally claimed treaty benefits. 

1. A foreign vendor used by a department more than one time, department must obtain and / or provide a UO Vendor Number.
2. When the foreign vendor is not yet set up in Banner A/P, the department must obtain a W-8 form from them or their website and set them up per Accounts Payable procedures. See new Vendor-setup secure transmission of W-9/8 forms
3. If it is determined there are applicable income taxes on the purchase, your department must provide an index to charge for the taxes.
4. There is no way to withhold federal taxes from a PCard purchase.
5. The grossed-up income tax rate is 42.857%. (.30/ (1-.30))
6. Tax Services will create a Banner JV to charge the expense to the purchasing department's index.
7. If the department is unable to obtain a W-8 form, for any reason, an exception request will require, in addition to the other information, a pdf attachment of your department's email sent to the vendor requesting their W-8 form, their full name and a physical address, and an index to charge for the 42.857% grossed-up tax, if it is applicable.

Please contact Joy Germack, Tax Services, jgermack@uoregon.edu with questions.

Be sure to verify with Foreign Entity that they can receive AND cash a paper check issued by the University of Oregon and mailed to their permanent address. Mailing systems are not always reliable and there are some countries that are not accepting mail.  A viable alternative is to send payment in a bank wire.  See Accounts Payable overview on Outgoing Payments to Foreign Countries.

• Payments for services provided outside the U. S. by Foreign Entities and individuals are considered foreign source, and are not subject to U.S. income tax reporting or withholding.
• Payments for tangible goods or products are not subject to U.S. income tax reporting or withholding.
• A W-8 form is required for vendor set up, so the University can produce a payment document.
• Please Follow A/P Vendor Setup procedures.
• Services provided inside the U.S. are subject to U.S. Income Tax including tax reporting and possible tax withholding, if no treaty benefits were formally claimed by the vendor.
• Payments for Royalties, Software licenses, Databse access, right to use, or licenses purchased from foreign entities and used inside the U.S. are subject to U.S. income tax.
• Awards & Prizes are subject to 30% income tax withholding.  There are no treaty benefits for this type of income.
• U.S. tax regulations include income tax reporting and 30% tax withholding or 42.857% additional tax gross up, unless Treaty Benefits are not available and formally claimed.  Or unless the vendor provides a valid W-8ECI or W-8EXP.
• Vendors set up as Foreign Entities, non-individuals, are not eligible for reimbursements or third-party payments for Travel Expenses.

While requesting a W-8 form from your vendor is the perfect time to verify if the Entity is able to receive a paper check in the mail or if a wire is requested.

Collect the appropriate W8 form from the organization and send to University Business Affairs- Accounts Payable (A/P) via a Secure One Drive. 

There are four W8 forms available for foreign entities (non-individuals). Note: a sole proprietor, not a corporation or partnership, must use the W-8BEN or W-8ECI form.  

The vendor may determine the appropriate form by following the criteria outlined at the top of each of the forms or their instructions. The W-8BEN-E form is most commonly used by foreign entities to claim foreign status and treaty benefits. 

University Business Affairs Tax Services cannot give exceptions to IRS W-8 form requirements. Incorrectly or partially filled out W-8 will must be corrected before a vendor can be set up.

NOTE: W-8 forms that contain any information that is written or typed in a manner that is inconsistent with the rest of the form are not acceptable and will be returned to the initiating Department. 

W-8BEN: This form can only be used by Individuals or Sole Proprietorships See Payment Process for International Individuals

W-8BEN-E: Used primarily by entities to claim foreign status and to claim treaty benefits.

• Entities not eligible for the other W8 forms should use the W-8BEN-E.
• A foreign entity from a country that has negotiated a tax treaty with the U.S. that has an article contained that exempts the type of income they are providing, will need to complete a W-8BEN-E to claim income tax treaty benefits.
• A Foreign or a U.S. tax identification number can be used for treaty exemption from tax withholding.
• All fields in line 14-15 must be completed to claim treaty benefits exemption.

• W-8BEN Form can also be used by business owners who are sole proprietorships. Their business name goes on line 7 of the form.

• The only Valid version is Rev. October 2021, top left of form.

• **There is space for two addresses, vendor's foreign address and a mailing address, but only their permanent address outside the U.S. is required.
• A U.S. Taxpayer ID number or Social Security Number is Not required.
• the foreign Taxpayer ID must be provided line 6a or the box checked line 6b
• the DBA business name is entered on  line 7
• their Date of Birth is required on line 8
• the box above the signature must be checked,
• the signature cannot be typed in. It must be a wet signature or electronic software signature

W-8BEN-E Form (Businesses, occasionally individuals)

• Use only the valid version -Rev. October 2021
• Line 1-Name
• Line 2- Country of Organization
• Line 4- One box must be checked
• Line 5- One box must be checked (NFFE = non-financial, foreign entity)
• Lines 6 and 7: There is space for two addresses, vendor's foreign address and a mailing address, but only their permanent address outside the U.S. is required.
• Line 8 is not required
• Line 9b The Foreign Taxpayer ID (FTIN) is required (line 6b is not an option for businesses), 
              Example: A vendor from Germany, provides their (FTIN) Germany Tax ID Number
• The box above the signature must be checked, and
• the signature cannot be typed in.
• when Tax Treaty Benefits Part III are being requested, please TEAMS me or email Joy Germack jgermack@uoregon.edu to set up an appointment before sending W-8BENE to A/P so we can discuss applicable treaty article and its unique requirements.

W-8ECI: Used primarily by the payee or beneficial owner that all the types of income that is listed on the form is effectively connected with the conduct of a trade or business located within the United States.

• The type of income must be identified on Line 9 of the form to qualify for exemption. If it is not listed we are required to obtain from the entity a different type of W8 form.
• A U.S. tax identification number is required for exemption from income tax withholding.

W-8EXP: Used by the following entities to claim exemption from income tax withholding, foreign governments, foreign tax exempt organization, foreign private foundation, govt. of a U.S. possession, or foreign central bank of issue.

• The entity must be claiming exemption under IRS code 115(2), 501 (c), 892, 895 or 1443(b). Otherwise they need to file a W-8BEN or W-8ECI.

W-8IMY: Used by an intermediary, a withholding foreign partnership, a withholding foreign trust, or flow through entity.

• Copies of appropriate withholding certificates, documentary evidence, and withholding statements must be attached to the W-8IMY as well.

The IRS 1042-s form will be issued to any international individuals or foreign entities that either had federal income taxes withheld or claimed income tax Treaty Benefits during a calendar year. The University of Oregon is required to mail the 1042-s form to both the IRS and to the Recipients by March 15 of the year following the calendar year in which the income subject to reporting was paid. If March 15 falls on a Saturday, Sunday, or legal holiday, the due date is the next business day.  The University will make every effort to have these forms in the mail sooner than the due date. 

1042-s forms are issued to foreign vendors, individuals and entities, are issued by University Business Affairs Tax Services. A vendor might receive more than one type of 1042-s form for the same calendar year.

All income taxes withheld are sent to the IRS in the name of the beneficial owner of the payment.  The 1042-S form is used to tax report the gross amounts paid to and taxes withheld from foreign persons or foreign entities that are subject to income tax reporting, even if no amount is deducted and withheld from the payment due to a treaty benefit.

The recipient may use the information on the 1042-s form to fill out a U.S. tax return and request a tax refund from the IRS.    https://www.irs.gov/forms-pubs/about-form-1042-s

Last updated 12/04/2025