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Taxes And Withholding

Sellers who reside outside the United States are subject to income tax withholding. A percentage of your sales will be withheld from your monthly payouts so that it can be reported and remitted to the Internal Revenue Service. Taxes are not withheld from sellers who live in the United States. This is because United States sellers already withhold and remit their own income tax on their tax return.

How Much Is Withheld?

The standard tax withholding amount is 30%, which means 30% of the income made by non-US sellers is withheld. However, many countries have tax treaties that lower this withholding amount substantially or remove it completely. In fact, most sellers will experience a reduced or nil withholding amount. If your country has a tax treaty with the United States, then taxes will be withheld using the modified withholding percentage as defined in the treaty. To see if your country has a tax treaty with the United States, you can check the United States Income Tax Treaties List on the IRS website. For a list of specific withholding percentages for each country, you can browse the IRS’s Tax Treaty Table and refer to the “Know-how/ Other Industrial Royalties” column. For example, you can see that the United Kingdom and Canada have a 0% withholding rate, whereas Australia has a 5% withholding rate. If your country is not listed, then no treaty exists and your income is subject to the standard 30% withholding.

How Do We Report Taxes?

When you join as a seller, you are required to fill out at W-8 form, which provides us with your company’s information. This information is used to remit taxes to the IRS.

Required Tax Forms For All Sellers

When you sign up as a seller, you will be asked to fill out one of three W-8 tax forms.

  • Are you a resident of the United States? You will be asked to fill out a W-9
  • Are you an individual living outside of the United States? You will be asked to fill out the W-8BEN
  • Are you a business living outside the United States? You will be asked to fill out the W-8BEN-E

Here you can find additional instructions about the W-9, W-8BEN and W-8BEN-E.

Filling In Your Foreign Tax ID, SSN Or ITIN

In order to claim a treaty benefit and reduced tax withholding, you will need to supply either a Foreign Tax ID from your country of residence or a United States Tax ID in the form on a SSN or ITIN when filing out your tax form. If you already have a Tax ID from your local government, then you do not need to supply a United States Tax ID and you can leave the SSN and ITIN sections blank. If you do not have a Foreign Tax ID, then you must apply for one in your country, or you must obtain a United States Tax ID. You can apply for an ITIN using form W-7. The process takes several weeks.

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