How will my earnings as an author be calculated after withholding tax is applied ?
If the sale of a $45 WordPress theme is to a U.S. buyer.
The first thing is that in a $45 WP theme sale, $9 (20%) of that is our Envato Buyer Fee directly to the buyer. So the author’s Item Price is in fact just the $36.
Step 1: $45 - $9 = $36 is the author’s Item Price
Next, we apply US Royalty Withholding Tax (RWHT) and send this to the IRS. This changes based on the treaty rate between your country and the USA. Again, using your example, let’s say the author’s country doesn’t have a treaty with the US and the RWHT rate is 30%.
Step 2 (part 1): 30% of $36 = $10.80 to the IRS
The other thing that happens (at virtually the same time as the RWHT is applied) is that we take our Author Fee. This will be based on the kind of author you are (exclusive or non-exclusive) and the amount you have sold on Envato Market. You can see these rates here.
Let’s say for the purposes of this example that the author is an exclusive Elite author with an Author Fee of 12.5%.
Step 2 (part 2): 12.5% of $36 = $4.50 to Envato
These amounts are deducted in sequence from the author’s earnings of $36:
$36 - $10.80 (to the IRS) = $25.20
$25.20 - $4.50 (author fee to Envato) = $20.70
Therefore the author will have a net earning of $20.70.