Tax forms

[Tucker]

Hi,

I am complete NEWBIE at this and I would really appreciate anyone’s advice.
I am based in the UK and have had tracks accepted by a company in the US.
According to the deal the company are taking 65% on ant tracks sold. They have also sent me a W-8BEN tax form that states I will also be charged 30% tax on anything.
Just checking but is it correct that I will only see 5%?
Is the tax figure correct?

[Edouardo]

No, you will be taxed on what you receive not on what the customer pays for the licence.

For a sale of 100 US$, you will receive 35$ on which you will be taxed 30%, that is 10.5$. In the end you get: 24.5$, i.e. 24.5%.

65% for the library is a pretty rough deal for the composer… I think I have come across this one when investigating libraries: that number just made me zap it without further consideration.

[Tucker]

Thanks for your quick reply. Very much appreciated.

[Tbone]

Woooo hold on there.

ALL THE BELOW IS JUST MY LAYMAN’S EXPERIENCE

Tucker, you are UK based and apparently there is a treaty with the US to avoid the US’s “withholding tax” (not sure it is 30% for UK, might be 20%). You need to get an ITIN from the IRS, which you can do by filling in a form, and sending that with a notarized copy of your passport to the IRS. The easiest way to do this is at the IRS office in the US embassy in London – they will help you a lot and also notarize your passport for free. Not many people know this. I got my ITIN exactly this way.

I think you can also set up a corp and get an EIN. Up to you. Either way, you absolutely do not have to pay that tax, assuming it’s withholding tax. That’s what I was told.

[Tucker]

Hi Tbone,

Thanks for the information. I have looked in to this and as part of my submission to the IRS I will need a letter from the company dealing with my music stating I am not a US citizen and am working for them.
Did you have to do this also?

Thanks

[Tbone]

Yes I did. And I had to make sure it said specifically something to do with royalties which I can’t remember. Ask the IRS for the correct wording. I got it wrong the first time and had to reapply.

[Tucker]

Hi again,

Thanks very much Tbone for your help with this. I am currently progressing this including a trip to London to hand in my documents.
Once again thanks very much for pointing this out to me.

[Author]

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