Self-Employed Canadian working in US - Withholding?

[Neo]

As Canadian resident, sole-proprietorship performing consulting services in US (no fixed base) and paid by US company, would any withholding apply? There seem to be contradiction:

http://taxes.about.com/od/taxplanning/qt/form_W8BEN.htm

The tax treaty specifically allows for US companies to withhold income taxes on self-employed Canadian residents (Article XVII, paragraph 1). Withholding will be 10% on the first $5,000 of income, and 30% on income over that threshold. The client and independent contractor may agree on a lesser percentage of withholding if these amounts are considered "excessive" (Article XVII, paragraph 2).

Vs. this info on your site:

http://www.serbinski.com/working-in-usa ... tors.shtml

(c) Treaty Issues - Self employed Canadians working in the U.S.
This filing position applies to persons who:

1.Are Canadian Residents;

2.Provide personal services in the United States for which they are paid directly (personally) by the U.S. "employing" company;
Under these circumstances, the individual falls under the Canada U.S. Protocol - Article XIV - "Independent Personal Services", which states:

"Income derived by an individual who is a resident of a Contracting State in respect of independent personal services may be taxed in that State. Such income may also be taxed in the other Contracting State if the individual has or had a fixed base regularly available to him in that other State but only to the extent that the income is attributable to the fixed base."

Therefore all self-employment income is exempt from U.S. taxation, irrespective of amount or time spent in the United States, so long as it is paid to them personally as self-employed individuals, unless the individual has a fixed base in the United State

[nelsona]

The about.com article is completely out-of-date. Article XVII has been repealed for 2 years now.

You should not be subject to tax (or withholding) .

[nelsona]

Of course, serbinski's article is also out-date, since XIV is also repealed.

You now fall under Atricles V and VII.

[Neo]

I am confused. Will you be subject to withholding or not if you are sole-proprietor? And if you do - maybe an answer is to incorporate in Canada? Or even in US?

[nelsona]

You are not subject to US tax.

[Neo]

Thanks Nelson!
Yes, I knew I am not subject to US tax, but I wasn't sure if I am not subject to withholdings. So for example I could be loosing 10, 20, 30 % of every pay and then submit return to IRS to get it back. But apparently what you are saying is there will be NO withholding and NO TAX. In other words:
CAN I PUT 0% on W8-BEN?

[nelsona]

I said earlier you were not subject to tax or withholding.