US Royalty Tax

Hi! Does anybody know what happened on 20 October?
Why do I have to pay US Royalty Withholding Tax now?
Previous 2 sales (on 19 October) were also with US customers. But it was without taxes.
I’m from Italy.

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Same problem here, also on 19 October!

Just happened to me as well! :thinking:

Probably treaties between Italy and the US changed overnight and now they tax us 5% from US sales…

Royalty Whithold Tax for Italy is 5% now.

See: US Tax Treaties

That page is updated 18 hours ago Probably new tax reforms / new treaties

Update: Google cache did indeed shows that it was 0%. Google Cache

Thanks for that!
Yeah now I see the 5%, but it was 0% until 24hrs ago, and as you can see they updated it 18 hrs ago…
Have I missed an announcement or Envato thought that that’s the kind of news that authors should not be informed about?

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Would be good if they did that, all though I dont know if that is possible because not all sellers from Italy have the same tax setup. ect.

An announcement like “hey guys, we’ve updated the treaties with the US, check this list to see if anything changed for your country” would have been highly appreciated, but no, I have to check my statements and be like :thinking: wth is going on here?
5% is not going to change my life but it’s a matter of principle, something changes, Envato should inform the authors.

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Agreed, that being said its not envato’s job to inform you on tax reforms :wink: .

What is weird to me is that the withholding rate for the Italy US treaty has been 5% since for ever. (source page 8) it seems to me that you guys from Italy might got a bit “lucky”.

More sources:
https://www.irs.gov/pub/irs-trty/italy.pdf ( section 12-2 )

That’s very true, but as they informed us about the start of those tax treaties, they could inform us about the updates too =)
I hope italians will increase their prices of pasta and pizza for the US of 20% :joy:

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Yeah it seems that it has been a mistake on their part from the beginning. Calculating 0% until now. Hope you guys not get a charge back :hushed:

:sushing_face:

Actually, I think it was 0% for music and 4 or 5% for video/photos I guess. I don’t remember where I read that in the past years.

My BMI statements are quite clear: 0% taxes withheld. In my w8-ben form I simply stated I was from Italy and automatically got 0%.

I got 0% also from the other websites I’m working for, automatically, just for being italian. Probably they’ll switch to 5% too.

Yes, I expect the next BMI statement having a 5% taxation too at this point

  1. However, such royalties may also be taxed in the Contracting State in which they arise and
    according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other
    Contracting State, the tax so charged shall not exceed:
    a) 5 percent of the gross amount of the royalties in respect of payments of any kind
    received as a consideration for the use of, or the right to use, any copyright of literary, artistic,
    or scientific work;
    b) 8 percent of the gross amount of the royalties in respect of payments of any kind
    received as a consideration for the use of, or the right to use, motion pictures and films, tapes or
    other means of reproduction used for radio or television broadcasting;
    c) 10 percent of the gross amount of the royalties in all other cases

From irs.gov

Artistic work has been 5% since the treaty started.

If we read the paragraph 3 or the article 12 of the Italy-US Tax Treaty:

  1. Notwithstanding the provisions of paragraph 2, royalties
    arising in a State and paid to a resident of the other State for
    the use of, or right to use, a copyright of literary, artistic
    or scientific work (excluding royalties for computer software,
    motion pictures, films, tapes or other means of reproduction
    used for radio or television broadcasting) shall be taxable only
    in that other State if such resident is the beneficial owner
    thereof.

Now, authors income is based on him giving right to use a music license (copyright of artistic work)
and that, in my understanding, would allow a musician to have a 0% tax rate in this case.

The paraghraph says between ( ) :
excluding royalties for computer software = music royalties are not a computer software
motion pictures, films, = music royalties are not in these categories
tapes or other means of reproduction used for radio or television broadcasting = a music royalty is
an income generated by selling a music license, which is not expressively intended to be used in radio or television (in fact, many buyers use music for their private videos, or youtube videos etc…) and it’s not, on itself, a “mean of reproduction”, but simply a non-tangible artistic work in the form of a wave/mp3 file…

Doesn’t this mean that an italian audiojungle author can claim a 0% tax, based on article 12(2), (3) ?

Happy to receive clarifications/help to understand!