There’s some good news today: Linden Lab are clarifying the process for filing form W8-BEN for non-US residents so there should be less confusion about the place!
My account has now been cleared for withdrawals and LL have not withheld any US tax.
I’ll summarise what we know currently:
You do not need to obtain an EIN or ITIN for the form W8-BEN. You just put in your territory’s local taxpayer identity code – in the case of the UK this is your National Insurance number.
If you’re not sure what number you need to provide try looking up your country on the National Identification Numbers page on Wikipedia.
So to clear your account status for withdrawals again you just need to fill out the updated W8-BEN form and upload scans of your identity documents on the support case LL open for you. If your non-US ID is accepted then it looks like LL will not be withholding any US tax.
Everything for the rest of this post is conjecture and may not be necessary ever.
Other US based online marketplaces like Amazon Direct Publishing also require non-US citizens to file a W8-BEN but in their case you need an ITIN or EIN to avoid paying 30% US tax. LL probably have good reasons for not doing it this way but the fact that they are the one exception makes me a little nervous.
If things should change in the future then you will need either an ITIN or an EIN. The IRS has recently been gradually increasing the difficulty of getting an ITIN until it’s almost impossible to obtain one (in the past year they have tightened the criteria for accepting identification documents to comic levels and have made proving you need an ITIN much more difficult) . I would not be surprised if it becomes harder to be assigned an EIN soon, too.
Right now an EIN is easy to get – you can obtain one over the phone in about ten minutes (once you get off hold! See my previous post for details). My feelings are that getting an EIN now is a sensible hedge against future changes. You will need one in any case if you want to expand into any other US based online marketplaces. It may save you some hassle in future.