Is a referral reward from a US company US-source income if you live outside the US?

The short answer: it depends on where you do the work

A payment from a US company is not US-source income just because the payer is American. Under the US sourcing rules in the Internal Revenue Code, pay for personal services is generally sourced where the services are performed; this page uses the IRS payer guide below as its primary source and does not replace advice on your facts. A partner in Lisbon who makes every call, email and video meeting from Lisbon is usually earning foreign-source income, even though the reward comes from a US business and concerns a US company.

Two facts can change that. The first is where the work physically happened: flying to Chicago to sit in on a first meeting with the referred company's CFO is work performed in the United States. The second is characterization: the name on a payment does not settle its tax treatment, and income treated as something other than pay for services follows different sourcing rules. Both are questions for a US tax adviser, not for a referral program.

This is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or professional body before acting.

What does the IRS framework actually cover?

Sourcing matters because US tax and withholding on foreign persons attach mainly to US-source income. The IRS guide for payers, Publication 515, explains how withholding agents treat US-source income paid to nonresident aliens and foreign entities, and notes that pay for services a nonresident alien performs in the United States is generally subject to withholding. Whether anything is withheld from a particular referral payment depends on the facts, which is why payers collect documentation before they pay.

That documentation is a certificate, not a tax return, and it goes to the payer rather than to the IRS. A US person, including a resident alien, provides a Form W-9 so the payer can report what it pays. A non-US individual provides a W-8BEN, and a non-US firm provides a W-8BEN-E; the W-8BEN-E guide for advisory and consulting firms covers the entity version.

Three questions that decide the answer

Work through them in order. An early answer can make the later ones irrelevant.

1. Are you a US person at all? US citizens and resident aliens are generally taxed by the US on worldwide income wherever they live. A US citizen running an advisory practice in Singapore cannot rely on the sourcing rule to stay outside the US system.
2. Where did you perform the work? Count every piece of the introduction: research, calls, emails, video meetings and any in-person meeting. If all of it happened outside the US, the reward is usually foreign-source. If some of it happened on a US trip, an adviser may treat part of the payment as US-source.
3. What is the payment, legally? A reward for making an introduction looks like pay for services. Royalties, interest and other categories have their own sourcing rules, and tax authorities can look at the substance of an arrangement rather than its label, so an unusual structure deserves a second look.

How the rule plays out in common partner situations

Keep a place-of-work log from the first email

Rewards arrive long after the introduction. They become payable only after the buyer pays and SourceX receives its fee, which can be many months after your first email, so notes made at the time are worth more than a reconstruction later. A plain spreadsheet is enough.

• Date, city and country for each call, email and meeting about the introduction
• Any US travel during the introduction period, with dates and purpose
• A copy of the tax form you gave the payer and the date you signed it
• The version of the program terms in force when you registered
• Payment statements and the bank record showing each amount received

Treaties, withholding and your home country

Treaties matter only if some income is US-source. Some US income tax treaties limit US tax on the business profits of a resident of the other country who has no permanent establishment in the US, and treaty claims are generally made on the W-8 form you give the payer. Whether your treaty helps, and which article applies, is a question for an adviser who knows both systems.

Your home country is a separate question. Many countries tax their residents on income from abroad, so foreign-source for US purposes does not mean untaxed at home. UK residents can read how US referral rewards are taxed for UK residents, which also explains how the W-8BEN sits alongside a British tax return.

What exactly is being paid to you

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company, and the reward becomes payable only after the buyer pays and SourceX receives its fee. The reward is a share of SourceX's fee, never deducted from what the referred company receives, so the company's licensing proceeds and your reward are two different payments with two different tax analyses.

The guide on separating a referral reward from the company's licensing proceeds explains why that line matters when you talk to the company's advisers. The referral earnings calculator shows how the published formula works, without promising any amount.

Questions to ask a US tax adviser

• Is my reward compensation for services, and is any part of it US-source given where I did the work?
• Am I a US person for tax purposes through citizenship, a green card or the days I spend in the US?
• If part is US-source, does the treaty with my country of residence reduce or remove US tax?
• Should I register personally or through my company, given how my home country taxes each?
• What should I record now so the position is easy to support if a tax authority asks later?

Next step

If you live outside the US and know a US company with 50+ full-time employees at peak (contractors excluded), years of records and an owner open to licensing, register as a partner and start a place-of-work log with your first email.