In my endless quest for maximum efficiency, I thought I’d create a catch-all post that I can refer people to if they have any questions that can be covered with a general explanation of fees and taxes. So here it is!
One thing to keep in mind, I’m not employed by Envato, so this isn’t the official company info on this. And… I’m not a tax expert either, so although I’ve ensured the following info is accurate to the best of my knowledge… always best to check with a tax expert before making any decisions based on this post.
So… the total price of an item that the buyer pays (the list price) is made up of a few things. There’s the buyers fee, which is 20% of the list price. Although, if it’s an item on GraphicRiver, then the item price is a fixed amount depending on what category your item is in. The buyers fee (for GraphicRiver items) will be detailed on the upload page when you submit your item.
Once the buyers fee is deducted, you’re then left with the item price. That’s the amount shown on your statement and is the amount that authors fees and taxes are calculated on. So if you see an amount on your statement for a sale, that’s different to the list price of your item, you’ll know why. It’s showing the item price, rather than the list price.
Currently, the exclusive authors fee varies between 37.5% and 12.5%. The percentage reduces by 1.25% every time you sell $3,750 worth of items. That’s calculated on the list price, not the item price. So if you’ve sold less than $3,750 then the author fee you pay to Envato will be 37.5% of the item price. If you’ve sold $37,500 worth of stuff then the author fee will be 25% etc etc. If you’re a non-exclusive author then it;s a fixed percentage of 55% no matter how much you sell. You can see the rates schedule here…
If you ignore taxes, and items on Graphic River, then as a new author… in most instances, it equates to you getting 50% of the total list price if you’re an exclusive author, and 36% of the total list price if you’re a non-exclusive author.
Then you have taxes. I’ll just cover taxes for non-US authors, as that’s my area of knowledge. Basically, now that Envato are operating in the US, they need to abide by US tax laws. One of which means that if authors are earning money from US buyers, then they should be paying tax to the US as a result. There can be ways to reduce or eliminate those taxes though.
If you visit your account, go to settings, and then to tax information, there is an online W8 form that you need to fill in. If you do not fill in the W8, then the IRS will assume that you are a US author and Envato are obliged to withhold 28% on all of your sales. That 28% is deducted from the item price. Not the list price or the item price after the author fee has been deducted.
If you fill out the W8 and don’t include a tax ID number, then you will have 30% withheld from all US sales, but nothing withheld from non-US sales. If you fill out the W8 with a tax ID number, then it will be the same as above, but you may get a reduction on that 30% if your country has a tax treaty with the US. For example, you’ll only pay 15% if based in India, and you won’t pay anything if based in the UK.
There’s a list of tax treaty rates here, courtesy of OsamaSayegh and Sealord:
https://www.irs.gov/PUP/individuals/international/Tax_Treaty_Table_1.pdf
Armenia 0%
Australia 5%
Austria 0%
Azerbaijan 0%
Bangladesh 10%
Barbados 13%
Belarus 0%
Belgium 0%
Bulgaria 5%
Canada 0%
China 10%
Cyprus 0%
Czech Republic 0%
Denmark 0%
Egypt 15%
Estonia 10%
Finland 0%
France 0%
Georgia 0%
Germany 0%
Greece 0%
Hungary 0%
Iceland 0%
India 15%
Indonesia 10%
Ireland 0%
Israel 10%
Italy 0%
Jamaica 10%
Japan 0%
Kazakhstan 10%
Korea, Republic of 10%
North Korea 30%
Kyrgyzstan 0%
Latvia 10%
Lithuania 10%
Luxembourg 0%
Malta 10%
Mexico 10%
Moldova, Republic of 0%
Morocco 10%
Netherlands 0%
New Zealand 10%
Norway 0%
Pakistan 0%
Philippines 15%
Poland 10%
Portugal 10%
Romania 10%
Russian Federation 0%
Slovakia 0%
Slovenia 5%
South Africa 0%
Spain 5%
Sri Lanka 10%
Sweden 0%
Switzerland 0%
Tajikistan 0%
Thailand 5%
Trinidad and Tobago 0%
Tunisia 15%
Turkey 10%
Turkmenistan 0%
Ukraine 10%
United Kingdom 0%
Uzbekistan 0%
Venezuela 10%
So if you have an item with a list price of $10, then unless it’s on GraphicRiver, the item price will be $8. That’s the list price minus 20%. If you’ve sold less then $3,750 then your author fee will come to $3. That’s 37.5% of the item price. Minus the author fee from the item price and the amount you get is $5. That’s 50% of the list price.
However, if you have tax deducted then you need to calculate that as a percentage of the item price and then minus that from the amount you get. If that’s 30%, then 30% of $8 is $2.40. Minus $2.40 from $5 and you’re left with $2.60.
If you have an EIN or SS number previously issued to you by the IRS then use that. Most people probably won’t. If not, you should use a foreign tax ID… which is a tax ID number specific to your country. You’ll have to check with a tax expert to find out what that number is, but if there’s a specific ID number that your tax office use to identify you, then that’s probably going to be the one to go for. For example… in the UK people have used their NI number or their UTR number. Both appear to be fine.
There’s no need to enter this tax number if your country doesn’t have a tax treaty with the US that provides a deduction in the amount withheld.
Anyway, that’s the basics of fees and taxes. You’ll find other posts in the forums with advice and anecdotal evidence of tax issues for authors of specific countries. Hope that helps!
