Following on from Collis’ October 2015 announcement, we’ve just released the final changes to make our American company (Envato USA Inc) live and ensure we are complying with US federal tax requirements. These include:
All Envato Market US users will now pay, and be paid by, our US company.
Swift fees have decreased from US$35 per transaction to US$25 per transaction.
US Royalty Withholding Tax (US RWHT) will be applied on all sales by non-US authors to US buyers. There are a few exceptions to this rule - see “When will Envato not apply US RWHT?” in Collis’ post.
US Backup Withholding Tax (US BWT) will be withheld at the rate of 28% of total worldwide sales and remitted to the US Internal Revenue Service (IRS) for all authors, service providers and affiliates who have not submitted a W form (W-9, W-8Ben or W-8Ben-E).
US RWHT and US BWT will be reflected in corresponding transaction lines on the Statement page.
All revenue for the 2016 calendar year will be reported as required by the IRS in 1099 and 1042 forms.
Full details, including how US taxes are calculated, instructions for how to complete a W form and more, can be found in the following posts and help center articles:
We also have a special email address (taxinfo@envato.com) you can write to where we’ll provide as much help as we can. Of course, this has the caveat that you should always seek advice from a professional accountant / tax advisor because we can’t advise about your specific tax situation.
So I was a bit slow to file my US tax forms. But hey, it’s still 2015 in half the US…so I rushed and filled out the W-9. In the meantime, I made a sale…but instead of the $9.69 I had been earning on a $19 sale, I made…$5.43.
It’s still 2015 in my old California hometown. Why was US tax money deducted on a 2016 sale “Australia time”?
My questions are:
A) if it’s a US Tax, shouldn’t it be subject to US Time?
B) if it is subject to Australian time, why was tax deducted on my second sale of 2016 but not the first?
I hope it’s in Las Vegas. That would be pretty cool. I’d guess at San Fran though, whether it’s a physical or a virtual location… Apple, Google, Envato. That’s what I’d go for anyway. Aim big!
Thanks for your questions. The Marketplace system runs on AEST, ie the time in Melbourne Australia.
US RWT and US BWT were switched on at approximately 11.00am AEST on January 1, 2016.
Any sales prior to this time were not assessed by the system for US Taxes, and will not appear on the 1099 / 1042 reports Envato USA Inc submits to the IRS and the Author after the end of the 2016 calendar year. Basically the new company started trading at that time.
I hope this helps 8BallAudio, if you have any other questions please let us know and we’ll do our best to clarify.
Now that I have gotten my W-9 form filed, can I assume my subsequent sales will reflect the appropriate tax rate? Or even better - the single sale that was taxed at 28%(?) will be adjusted accordingly?
Thanks for your post. Today we deployed the best part of a years work for 1 team and lots of months of work from a few other teams, to make the US taxes work. It involved changes with a number of external party systems we are integrated with. This requires considerable coordination and testing. Our people have worked extremely hard over the past year, under considerable pressure to hit these dates, and are always extremely conscientious to make it all work properly. I have worked in many places where the bug list for such a large release would already be very long. I think they have done well.
You won’t see that many changes in the public facing interface, but there is a lot under the covers. We chose not to deploy the new payment method yet in order to more gradually turn things on in production / decrease risk of issues arising, as we were releasing a lot of new code at once. We feel this is the responsible and considered approach for stability of the site and to keep everyones businesses running smoothly. Of course that is a very high priority for us, and always a risk in significant releases like this.
We will monitor the changes that we turned on and at the right time we will add to them.
One step at a time, first the infrastructure, then the exciting stuff on top. The new payment method is coming soon.
I hope this context helps. If you have any further questions on it please let us know.
Hi 8BallAudio, I can clarify. Your sales subsequent to submitting a valid W-9 form will not incur US BWT or US RWT, per many other transactions processed by the system for that same case already.
Sorry about the kindergarten level question, but I’m right that the only way to avoid paying tax is if you have a tax number, and for that you need to be a registered business in the UK? Just double checking. I’m not a business, so I assume that I can’t avoid paying tax.
I don’t think you need to be a business to claim the US-UK tax treaty benefits. For UK, the FTIN should be your UTR (Unique Taxpayer Reference). Check this pdf for more informations.
Hey @danga12 , I hope The new Office can attract more buyer , If nothing change The new VAT policy will slowly kills author income,
now i get 20% VAT cut but from the IRS Withholding Tax Rates Tab it should be 10% for Indonesia why i get additional 10% cut?
Name----- Code— Industrial Equipment---- Know-How/ Other Industrial Royalties- Patents---- Film & TV---- Copyrights
Indonesia --ID---- -----10----------------------------- -10----------------------------- 10----------- 10--------------- 10
I’m not a business, so I assume that I can’t avoid paying tax.