Self-published authors, who utilize the free publishing software provided by such companies as Amazon and Smashwords and others, will be aware that under United States of America tax laws, 30% of US business incomes must be withheld unless appropriate documentation has been successfully submitted.
If you are a non-US citizen you may consider such a withholding does not apply to you because you do not conduct business within the US. However, you would be wrong. Though your ‘business’ (that of being an author) is based in another country, your product (book in our case) is created by and sold from a US based business e.g. Amazon, Smashwords, iBooks, Google Play Books, etc. Consequently, your ‘business’, for tax purposes, is considered to be a US based one.
Prior to recent changes you needed to submit detailed documentation and probably apply for a US Tax Identification Number to recover the 30% withholding companies were obliged to keep back from your royalty payments. Thankfully, the tax regulations have been eased, allowing authors to claim exemption under various treaty agreements. Nevertheless, it is still a fairly complicated field to manoeuvre through.
I publish all my books through Amazon (various international sites); Smashwords (which distributes to a number of retailers: iBooks, Barnes & Noble, Nook and many more including library listings); Google Play Books (they are not included in Smashwords distribution so I have my own account with them). Each of these companies is obliged to request tax information. Amazon and Google Play Books make matters a little easier by enabling such information to be submitted electronically. Smashwords requires a physical form be submitted by post.
Amazon provides a questionnaire that, overall, is reasonably easy to complete nevertheless, there are elements which need to be clearly understood. Most of us find it hard enough to understand the tax laws of our own nations let alone those of other nations and cultures. Great care must be taken when completing these exemption request forms. I understand, if rejected, it takes a very long time to sort out. Even what appears an insignificant matter may result in rejection. For example, date format: US dates are written as month, day, year whereas UK dates are presented as day, month, year. Apparently even something as simple as this can result in the form being rejected.
If you have an existing account with any of the USA based companies, you should review your tax status and consider completion of a new exemption request form. There is no obligation to submit a revised form however, if you do not, the company has no choice, legally, but to withhold thirty percent from your royalty payments. It is possible to reclaim the withheld amounts but it is a long and complicated matter. In view of the fact there are now a number of new treaties that provide for tax exemption, I advise you take time to complete a new tax form for each of the companies with whom you publish.
Though the new forms are comparatively easy to complete I, when submitting them for all my accounts, felt a need for some guidance. I was therefore very grateful to have come across the book; Beyond Frontiers: US Taxes for International Self-Published Authors by Marcela Martinez Millan.
I cannot recommend this book highly enough. The author, a qualified tax advisor and a US Enrolled Agent that allows them to represent taxpayers, has provided a most comprehensive guide for Non-US self-published authors. She delves into all aspects whether you are publishing as an individual or corporation. Gives guidance on what you need or do not need to apply for. Explains about tax treaties and how to complete the various forms, highlighting where errors may unconsciously occur.
This resume does not do justice to the book or the advice and guidance provided. I TRULY CANNOT RECOMMENJD IT ENOUGH. To be frank, I think it is a publication all authors should avail themselves of. Within the usual book rating systems, I, without hesitation, consider this warrants five stars (5*), if not higher. The author’s generosity in sharing all the advice is further complemented by the low price £0.99 ($1.28).
The book is available as an e-book.
Disclaimer: Other than having read the book and taking advantage of the guidance provided, I am in no way associated with the author and do not know them personally.