Please read this to understand how taxes work for clients outside of the USA.
* If you don’t have an ITIN or EIN you can put your Date Of Birth when updating the tax detail
As per tax regulations, Verse One Distribution will now have to withhold a portion of your royalties and pay it to the United States Internal Revenue Service (IRS). The portion withheld depends on if the USA has a tax treaty established with your country. In some cases, the withholding is 0, and/or it may be 5% or 9%. These funds are then paid directly to the United States Internal Revenue Service (IRS).
Further, it is only based on USA sales or streams. It is not for all territories
Example: If a record label based in the country of Afghanistan who has no tax treaty with the USA sold $50 for Q3 of a calendar year (July – September) in the territory of USA, then we would be withholding 30% of that income which equals $15 prior to paying that label in Afghanistan. If the same label made $200 in Germany, and $500 in Spain, then we wouldn’t withhold from those countries.
In order to qualify for the lowest withholding possible, you’d need to fill out a W8-BEN form for us to pay the royalties and further to not have so much withheld if there is a tax treaty. MOST major countries of the world have a tax treaty with the USA so filling out a form with us means you won’t be withheld any royalties whatsoever.
If your country does NOT have a tax treaty with the IRS, there will be a withholding of 30% of only USA sales or streams (no other territories). This withholding may be able to be paid back if you discuss with your local tax representatives.
This isn’t a rule imposed by Verse One, it is a regulation by law. In fact, in previous years, we worked hard to make this change not affect your business by paying additional just to be able to give you the most and best service possible. Under new rules and regulations however, we have to impose this.
In addition, every distributor in the world has this similar rule so if you worked with a distributor in Germany and/or the UK, then you would also have to deal with tax treaties and similar regulations, often times, it can be more.
f any questions, please reach out to us via our contact page