As I am from India I can’t submit this tax paper to it department. I can’t get my taxes back.
Every has their own story and their point of view . Right ??
I am not talking about the author level as you mentioned.
I just want to share my thoughts. If in case I hurt you I am really sorry for it…
In we are not clear with tax thing yet how we can get benefit of this tax treaty thing. I was asking Some CA about these things while tax paying. They are also confuse about these things. They just asking some time to read those documents envato sent and also tax rules about this treaty thing. I don’t think we indians don’t get benefit of tax treaty as an individual. So we would happy if envato creates a thread abouth this indian tax treaty thing how its get benefitcal for authors and give some information that would be helpful.
Dispite everything, and there for no losses for anyone, I think envato should apply a minimum value for a product.
For example. Instead of selling an HTML for $17, why not apply a minimum value for HTML products as $30?!
Ok, I understand that other markets sell cheaper products, but and what about the quality envato offers to customers?!
If the price range would increase, and every author would be on the same position, for changing their product values for the minimum value, this would be fair for everyone. Well, probably sales would be reduced, but at least for us as authors would receive a bit more $$ from our product sales.
For being well succeed, and having a great number of sales, an author needs to make an awesome product. For this to happen, the author needs to buy the last trending plugins. An author has to buy awesome images pack (so that it won’t be the same as everyone). An author needs to commit to the product and work for 24 hours a day, and lose many months, or years of work. And even if this author made an awesome work, and then there is like some product in the same line of products, but this product is the number one selling product, than the work and the time lost from the author was in vain, and the sales were rather poor, or maybe no sales at all, and also this takes again to the point that the value earned by an author isn’t profitable to keep working like this.
I know that you are going to say that Envato lets you decide, and you are free to leave.
But it’s always a bit unpleasant for an author to receive a low value when he took the time, where he could stay with his family, but still… this is business right?! And everyone as to play by the rules.
Very unlikely they will as they’re not tax advisors, an article on one country would mean they’d have to do one for every country, and they’d need to be constantly updated to adapt to every small change in the rules across all countries.
They minimise their exposure to liability if they leave it to the professionals… I.e. a tax advisor in your own country.
But as India has a tax treaty with the US, there’s no reason why you shouldn’t be able to offset the tax you’ve paid against the tax you owe. If somebody is saying you can’t, then I’m pretty sure they’ve got that wrong.
Probably best to keep that kind of thing in the ADP thread, as it’s not really related to fees in particular.
@MotionMAX I too agree with you.
Let me be frank.
Few months before even i had a website named http://webtechfreaky.com in which i just shared the monthly free files. just for free. and that project / site was a failure. i spent about 500$ in maintain it for a year. and it just had about 50Views and 5 downloads per month. and then later it was tracked down by envato and i took it down. but still i can see many other sites. where they are even reselling files. at a cheaper price.
For eg lets say you have a wp plugin. @ 20$ and other sites sell that plugin just for 1 - 3$ max. which if really bad. and also they dont buy it from envato. the collect those plugins from their customers and provide % based on the sites. i kown many site like that. (Not only me most of the ppls here knows)
Envato was able to take down only the failure website. but not able to take down the other website that the issue now.
anyways now i learn from it and feel very bad for running webtechfreaky.com. i really learned from it. and never ever will do that again!>
I am sure that there is noting to do with increasing the price of a product which might affect the product sales. but still you can do that with Author Driven Pricing As said by @SpaceStockFootage
as i said before i might be wrong. but still i am fighting here to earn .
My question is why i need to pay US Taxes ? because i pay my income tax in my country. if a custom from us buys an item then envato should take care of the US Tax not the author…
I am sorry if i said anything wrong
Found this article. It’s more about salaries than withholding tax on sales, but the general gist is the same… with regards to confirmation on the US being able to tax you and you being able to use that tax to your benefit when doing your Indian tax return:
Here’s an important excerpt from it…
If the service is rendered in USA, in addition to India, USA also has the right to tax that income. Person can claim credit of US federal income tax in Indian tax return (also known as “Credit Method”)
I did my best to find out how i can claim the US Taxes in india. but all our auditors says it can be done. i am not sure if any other india author did it!
Try mentioning this ‘credit method’ might help. Somebody must know how to do it!
@SpaceStockFootage Doesn’t that indirectly mean that the authors are covering the taxes for Envato? Considering the cut Envato gets is already taxed, by you, the authors.
Edit: Something weird is going on with this forum, I keep getting into very old topics, but on my end they appear as very very recently updated.
No. Whether you pay 0% or 100% tax, that in no way affects the amount of tax that Envato has to pay. Just like if Envato didn’t withhold anything… that would in no way alter the amount of tax you’d have to pay on your earnings in your own country. The only possible way that authors could be paying taxes for Envato, that Envato should be paying themselves… is if Envato don’t actually have to withhold any tax… and the tax they do withhold, they just use to pay their tax bill instead. There’s two reasons why that’s very unlikley to be true…
A) They do actually have to withhold tax. It’s a relatively common thing that a lot of business do.
B) That would be very serious fraud which would result in massive fines and possible jail time if found out. And as it’s a very public ‘scheme’ it would be easily found out… if you’re going to run some kind of massive tax fraud scheme, you’ll usually do it ‘behind the scenes’.
As for things being double taxed… that’s how the majority of governments make their money! Business earns money, pays tax on that. Business pays wages, employee gets taxed on that. Employee spends wages at the shop, pays sales tax. Shop pays tax on their earnings from you. Shop pays employee of shop who pays income tax on that. Employee spends wages at the pub, pays sales tax on that… and so on and so forth.
@SpaceStockFootage I am aware, but here in Norway at least, Scandinavia for that matter, you don’t get taxed for money you don’t get. Hence, in Norway, you would be taxed the amount you get after Envato gets their cut, transaction fees paid etc etc.
It’s not normal, for most countries, to get taxed for expenses and income, it’s only income that’s taxed, as in, profit. The logic behind it is incredible simple, if you had to pay taxes for the sale amount, and not the profit your left with, then a lot of companies would go bankrupt, as they would loose money. For instance, imagine you get taxed the full amount for selling something for a $1000 bucks but it cost you $950, your taxes there will be way higher then $50 and you would literally give away your own money in taxes.
A company also pays way less taxes then an employee, and companies mostly get taxed to avoid hoarding of money, otherwise it wouldn’t be necessary. Here you have a 20% tax for companies and 37% for regular employees. You’re not truly getting double taxed, as the company pays 20% tax of whats left after they have paid their employees (Expenses).
A company has 2 employees and in a year make 100,000 USD
Company Income = 100,000
General Expenses = 20,000
Employee 1 salary = 25,000 == Employee pays 37% tax
Employee 2 salary = 25,000 == Employee pays 37% tax
Company profit = 30,000 == Pays 20% tax on this amount.
Well you just write it off as a business expense, so the amount you’re being taxed on (which you’re not getting) doesn’t contribute to your taxable income. That way, nobody is going bankrupt. Well, they might be, but not for that reason.
But still, as a resident of Norway, the tax withholding rate is 0%… so your concern is either very altruistic, or you’re not aware of that and/or haven’t filled out the W8 form.
@SpaceStockFootage I’m not an author on Envato Fees are way to high for me to even consider giving my skills away for free.
But you didn’t really answer my question, because what you’re saying, based on your math, is that you can indeed go bankrupt in the US, because you do get taxed the full amount, not the amount your left with after expenses?
No, just like the cost of employees can be written of as an expense… the Envato fees can also be written of as an expense, and anything you’ve already been taxed can be offset against tax due. Well, that’s a definite in countries which have a double taxation treaty with the US, and a maybe in countries that don’t… not had any clarification from any of those yet.
In the United States, you do only pay taxes on your profit. However, they like to keep track of where money is going, so they require all income to be reported - even expenses. Then, you simply write off the expenses, and only pay taxes on the profit. It’s really simple.
In the United States, it works the same way. The government wants to know how much their expenses were, but doesn’t tax on them.
- Company reports earnings of $100,000 to the government.
- Company claims $70,000 as expenses.
- Company pays taxes on $30,000, between 21% to 25% depending on business type
It’s no different for Envato.
- Author sells $10,000 in a year (that includes author fees, but not buyer fees).
- Envato takes $3,750 in author fees (example).
- Author claims $3,750 in expenses.
- Author pays taxes on $6,250 (their profit).
Of course, you don’t pay taxes to the IRS if you’re not a United States citizen and are located in a country with a tax treaty preventing any withholding. You pay taxes to your local government, and tell them exactly what portion of the reported income was profit. Effectively, you’ll be taxed on the amount you get after Envato takes their cut and fees.
@SpaceStockFootage @allenherbert I don’t fully understand, @allenherbert’s statement is contradicting the first post made by @SpaceStockFootage in this thread, in the OP’s example, an item is sold for $17 and he and I use and used the same process to get to the result, and @SpaceStockFootage corrected him and said the US, unfortuantly, tax the full sale amount, so the tax would be higher.
The only thing I can get out of that, unless @SpaceStockFootage’s first post in this thread was completely wrong, is that you pay taxes for the full amount, and it’s then your job to claim the taxes you paid on your expenses back from the US ? Which sounds far from simple?