Backup Withholding Tax
If you are a non-US Author and do not provide a W-8, we are required under US tax law to treat you as a US Author and may be required to hold back 28% of your earnings and send it to the IRS. Refer to this article for more information on backup withholding taxes.
Royalty Withholding Tax
Generally, transactions in digital creative content gives rise to royalty earnings. If you are a non-US author, your sales to US buyers may be subject to withholding based on your country’s income tax treaty with the US.
US tax law provides that the US government may collect taxes for US source royalty income. A royalty is considered to be US sourced when the sale is made to a person residing within the US.
To find out your treaty article reference & paragraph number, and applicable withholding tax rate you can view an extract of ‘Table 1. Tax Rates on Income Other Than Personal Service Income Under Chapter 3, Internal Revenue Code, and Income Tax Treaties’ here.
You can view full the Table 1 on the IRS website here.
Forgot to mention it also depends on who is selling the item. If the marketplace sells it for you, and then pays you a commission, you will not be subject to such taxes. Envato is opting to be more like Amazon where you sell the goods and they simply provide the platform.
Unfortunately, I don’t see this improving here in any way. Envato wants their cut the same way they have since the very beginning, and Uncle Sam wants his cut too.
Ah, not necessarily! It’s withholding tax, meaning you can potentially get it back from your local government (again, depending on its tax treaty with the US) when you file your taxes. Best to consult a tax adviser on this if you have questions.
At the very least, you can be glad this customer chose your item over the others on AudioJungle, and earned you at least something, right? Better than not selling the item here, thereby not getting the sale at all.
Yes i am glad someone chose my item,but i am also angry that two hungry sharks took all the credit for it.
39$ out of 152$? No excuse for that.
I will remove all of my music from my exclusive account as soon as i make another sale and get to that 50$ mark(or several sales from US buyer,4$$$ each),as i see no benefit of actually being exclusive here.
From what I understand, non-exclusive authors get 30% after everything’s said and done. Exclusive authors get 50% - 70% depending on their lifetime sales value. (For example, I’m somewhere around 55% right now I think).
So there’s definitely an objective benefit to being exclusive (at least 50% vs 30%). Many authors don’t think that’s enough of a benefit, so they decide to go non-exclusive.
The tax issue sucks, but widtholding doesn’t mean that the US Gov takes it and keeps it. You can file taxes at the end of the year and get the money back. It’s hugely inconvenient, but they money is still yours. There’s really nothing Envato can do about that - it’s just the law.