I'm paying a foreign freelancer who did work inside the US — do I withhold, and is W-8ECI the right form for a treaty claim?

This is one of the most common and most expensive misconceptions. When a nonresident individual performs independent personal services physically inside the United States, the pay is US-source compensation and the payer is a Chapter 3 withholding agent. Publication 515 states the statutory rate is generally 30% unless a withholding agreement, a final-payment exemption, a valid treaty claim, or genuine ECI treatment changes the outcome. The contractor's status as a freelancer rather than an employee does not, by itself, remove the withholding duty.

A treaty exemption on compensation for personal services is claimed on Form 8233, supported by the required statement. The W-8ECI instructions are explicit that Form W-8ECI is not the form a nonresident alien individual uses to claim a treaty exemption on compensation for independent personal services performed in the US. W-8ECI belongs to a different scenario: where the income genuinely is effectively connected with a US trade or business. Accepting a W-8ECI to justify a treaty-based zero rate on these service wages would be relying on the wrong document.

Nonfinancial service payments are generally not Chapter 4 withholdable payments, so FATCA usually does not pile a second 30% layer on ordinary US-performed services. That keeps the analysis to Chapter 3: source the income, confirm the recipient is foreign, collect the correct treaty documentation, and withhold at the presumption rate if you do not have a valid claim in hand. Our /guides/form-1042-s walkthrough contrasts the 8233 and W-8ECI paths side by side.