Important Changes for Non-US Authors/Affiliates/Service Providers

[natman]

Hello again! First up, a general announcement for everyone who requested a letter from Envato support their W-7 application (attn: @MrMattMusic, @MusicPremium and @TopStudio). This document is now ready and available to collect from taxinfo@envato.com. In your email to taxinfo, please include the same full name you have entered on your W-7 form (usernames are not acceptable). Thanks again for your patience!

Now, on to the remaining questions…

Important question for Envato : WHY we don’t share the taxes if we share the income? WHY it is not calculated from our NET income (50/50 and then 30%) ?If you think this is okay, then why is it okay? @collis @natman

Thank you

Hi Mega_Music, themezkitchen raised similar questions that we replied to in a previous post. Here’s our original response:

US RWHT applies on an author’s total revenue. The portion of the sale which is Envato’s revenue directly from the buyer (i.e. our Buyer Fee) is separate. The remainder of the sale constitutes the sale by the author, and has tax applied. It’s an unusual income tax because it’s a gross-based income tax (i.e. applied on the sales, not on profit). We looked into whether we could apply the tax after our author fee, but it turns out that’s not how the RWHT system works.

Since non US sales are unaffected by the tax withholding and therefore must not be reported to the US IRS, why enforcing single transfers / country matching restriction to the whole account balance ?

What does prevent Envato from working the way it always had in regards of non US income ?

Our decision to move to the US has introduced a number of new requirements in addition to the tax-related ones. Some of the others relate to:

• How Envato Market US users will make payments to and be paid by Envato
• Withdrawals to multiple accounts; and
• Countries where you can no longer use Envato.

Applying them across Envato Market ensures that we have a consistency to how Envato works. Full details are available in the blog announcement.

Envato, how are you going to handle SALE REVERSALS after paying tax ti IRS? I mean if you paid tax to IRS and then sale reversal happens then what? Again we loose extra money from our earnings?

Good question! If RWHT is applied to a sale that is later reversed as a result of a chargeback, we will reverse any RWHT as well and refund the author this amount.

From what I understand, the form in the “Tax Information” section is the W-8 form you need to sign.

If you submit the form with a tax number, you will get the benefits associated with your country’s tax treaty with the US (usually 0-15%), or if your country doesn’t have a tax treaty it will be 30%.

If you submit the form without a tax number, it’s 30% on all US sales (though I haven’t seen a clear answer from staff regarding this yet).

If you don’t submit the form at all, it’s a blanket fee of 28% on all sales.

Staff (or anyone else) feel free to correct me if I haven’t understood correctly

Thanks JamesVMusic, this is correct!

To clarify:

• If you are not a US person, please select “I am not a US person” in the Tax Information section on your Settings page and proceed to complete the rest of the form. Completing this form online is equivalent to completing a hard copy Form W-8.

• If you submit a Form W-8 with a tax ID and your country has a tax treaty with the US, we will apply US RWHT at your country’s treaty rate on all of your sales to US buyers.

• If you submit a Form W-8 without a tax ID, we will apply 30% US RWHT on all of your sales to US buyers, even if your country has a lower tax treaty rate.

• If you submit a Form W-8 and your country does not have a tax treaty with the US, we will apply 30% US RWHT on all of your sales to US buyers, regardless of whether or not you have provided your tax identification number.

• If you don’t submit the Form W-8 at all, we will withhold 28% on all sales.