Tax withholding and Treaty Table for Non-Resident Alien Authors/Publishers receiving Royalty income from US vendors

By Alex Oware on 06/24/2015 10:00 PM

Royalties paid to a foreign entity or person are subject to tax withholding in the U.S.  A foreign entity or person is someone who is not a resident or citizen of the U.S. or a green card holder. The general rate of tax withholding is set by U.S. tax rules and regulations and is currently 30% of royalties paid. This withholding tax rate can be reduced if the recipient (you) is a resident in a jurisdiction that has a valid income tax treaty with the U.S.

Tax Treaty
This reduced rate is only available if the US vendor  receives the appropriate documentation from you. Without this documentation, the 30% withholding tax rate will apply.
To guarantee you qualify to receive the full or partial exemption from tax withholding, you should submit a signed IRS form, W8-BEN, to the US vendor, eg amazon, smashword etc.
The completed form must include a U.S. IRS-issued tax identification number – either an ITIN, SSN or EIN. If you are a U.S. citizen living abroad, you can complete a W-9 form with your SSN
Most authors and publishers don’t have one of the above IRS-issued tax identification numbers. so they must apply for one from the IRS.
 
When you apply for an ITIN or EIN, the IRS requires you also provide a valid and signed letter from the US vendor, written on the vendor's letterhead, stating your reason for requesting an ITIN.
If you think you may need an Individual Taxpayer Identification Number, we  can walk you through the process.  To get started with a private consultation, email us today by using this link
UNITED STATES TAX TREATY: AUTHORS AND PUBLISHERS GUIDE ON  ROYALTY INCOME
CONTRACTING COUNTRY STATUS ROYALTIES RATE
Australia Effective December 1, 1983 ,  Protocol effective July 1, 2003 5%
Austria Effective January 1, 1999 0%
Bangladesh Effective October 1, 2006 10%
Belgium Effective February 1, 2008 0%
Bulgaria Effective January 1, 2009 5%
Canada Effective October 1, 1984, Protocol effective February 1, 2009 0%
China Effective January 1, 1987 10%
Cyprus Effective January 1, 1986 0%
Czech Republic Effective February 1, 1994 0%
Denmark Effective May 1, 2000,  Protocol effective February 1, 2008 0%
Egypt Effective February 1, 1982 15%
Estonia Effective January 1, 2000 10%
Finland Effective February 1, 1991,  Protocol effective February 1, 2008 0%
France Effective February 1, 1996, Protocol effective January 1, 2009 0%
Greece Effective January 1, 1953 0%
Hungary Effective November 1, 1979,  New treaty signed February 4, 2010 0%
Iceland Effective January 1, 2009 0%
India Effective January 1, 1991 15%
Indonesia Effective February 1, 1991,  Protocol effective February 1, 1997 10%
Ireland Effective January 1, 1998,  Protocol effective September 1, 2000 0%
Israel Effective February 1, 1995,  Protocol effective February 1, 1995 10%
Italy Effective February 1, 2010 0%
Jamaica Effective February 1, 1982 10%
Japan Effective July 1, 2004 0%
Kazakhstan Effective February 1, 1997 10%
Korea, South Effective December 1, 1979 10%
Latvia Effective January 1, 2000 10%
Lithuania Effective January 1, 2000 10%
Luxembourg Effective January 1, 2001 0%
Malta Effective January 1, 2011 10%
Mexico Effective January 1, 1994,  Protocol effective September 1, 2003 10%
Morocco Effective January 1, 1982 10%
Netherlands Effective January 1, 1994,  Protocol effective February 1, 2005 0%
New Zealand Effective January 1, 1984,  Protocol effective January 1, 2011 5%
Norway Effective January 1, 1971,  Protocol effective June 1, 1982 0%
Pakistan Effective January 1, 1959 0%
Philippines Effective January 1, 1983 15%
Poland Effective January 1, 1974, New treaty signed February 13, 2013 (Not Effective yet: would be 5% once efective) 10%
Portugal Effective January 1, 1996 10%
Romania Effective January 1, 1974 10%
Russia Effective February 1, 1994 0%
Slovakia Effective February 1, 1994 0%
Slovenia Effective September 1, 2001 5%
South Africa Effective January 1, 1998 0%
Spain Effective January 1, 1991 5%
Sri Lanka Effective September 1, 2004,  Protocol effective September 1, 2004 10%
Sweden Effective January 1, 1996,  Protocol effective October 1, 2006 0%
Switzerland Effective February 1, 1998 0%
Thailand Effective June 1, 1998 5%
Trinidad and Tobago Effective January 1, 1970 0%
Tunisia Effective January 1, 1991, Protocol effective January 1, 1991 15%
Turkey Effective January 1, 1998 10%
Ukraine Effective August 1, 2000 10%
United Kingdom Effective May 1, 2003 0%
Venezuela Effective January 1, 2000 10%
NOTE:This table was last updated May 2015

***Disclaimer: I am a tax accountant and a CPA , but I am not your accountant or advocate (Unless you have signed up to my services). This communication is not intended as tax advice, and no tax accountant -client relationship results**