If you make a payment to what is termed a flow-through entity, the withholding tax rules to apply will depend on whether the owners or beneficiaries of the flow-through entity are foreign or U.S. persons. But if the income you are paying is effectively connected with a U.S. trade or business, the payment is treated as having been made directly to the entity, and not to the ultimate owners or beneficiaries.
Flow-through entities include foreign partnerships, foreign trusts, and fiscally transparent entities that receive income for which treaty benefits apply. A distinction is made between foreign partnerships and trusts that are withholding and those that are non-withholding. Flow-through entities include those that are non-withholding.
A flow-through entity should generally give you a Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding. This form should indicate whether it is a qualified flow-through entity and whether it is assuming responsibility for withholding. The flow-through entity may also give you the information you need to determine whether the owners or beneficiaries are U.S. or foreign persons, how much of the payment corresponds to each owner or beneficiary, and whether any of them are subject to a reduced rate of NRA withholding.