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Nuts and Bolts: International Artists’ Withholding Tax

August 20, 2013

It’s an issue international artists have dealt with since the news was first announced in this Forum thread back in 2011.

US tax law requires GCU withhold 30% of your earnings unless you file both a W8-BEN form AND obtain an ITIN (Individual Taxpayer Identification Number) or EIN (Employer Identification Number) from the IRS. If you are a citizen of a country other than the United States, you will be affected.

In this article, we’ll try to explain what’s going on, what you can do, and give you tips on possibly where to find more information. We obviously can’t provide ALL the answers to your questions as each individual country will likely have different procedures and requirements.

Please be aware the Powers-That-Be at GCU have already done research, spoken extensively to the IRS (the US Internal Revenue Service), and US tax law experts. They are aware that many POD and stock agencies do not require all the same paperwork. Believe me, international artists have made their feelings known on many occasions and the issue has been hotly debated since 2011. If you want to add your voice to the rest, your best bet is placing your comments in this Forum thread or any other Forum thread relating to the issue. GCU Admin will not see or respond to comments made on this post.

What is this tax withholding thing all about?
Some time ago, many countries in the world got together and signed tax treaties with the other countries. These tax treaties laid out what percentage, if any, of tax would be paid by citizens of one country doing business and/or earning income generated in another country.

Why do you have to pay the American tax agency (IRS) anything when you’re already paying taxes on your income in your own country?
It’s that pesky tax treaty again (see above). Countries who signed a tax treaty with the US have negotiated the amount of tax their citizens have to pay the IRS when earning money from a US based business. The good news is, many countries have a 0% withholding rate or at least less than 30%. Citizens of countries who do not have a tax treaty must pay a 30% withholding rate, period.

This is totally not fair!
Sorry.  That’s the law. As we all already know, there’s only one way of getting out of paying taxes. 😉 If it’s any consolation, every other international artist is in the same boat.

What does GCU do with the tax money they withhold from your earnings?
Any money collected for tax purposes is forwarded to the IRS as required by law.

What’s the first step?
Before you commit yourself to spending time and money wrangling red tape in your country, first do a little research and decide if this is something you even want to do.

Tax Treaty Countries and Article Numbers Go here to find out if your country has a tax treaty with the US and what percentage of tax GCU is legally required to withhold from your artist’s earnings.  If your country does not have a tax treaty with the US, or the withholding is already at 30%, or you do not wish to go to the trouble of additional paperwork to claim a treaty benefit (meaning a lower or no withholding rate, which is the case for many countries)  you need do nothing except fill out and file a W-8BEN form with Greeting Card Universe.

The W-8BEN form is required by the IRS for all non-US citizens earning income from a United States business. Regardless of whether you choose to accept the 30% withholding or want to go further and claim a treaty benefit, you will need that W-8BEN form filled out. If you don’t fill out a  W-8BEN form, GCU cannot pay you any of your earnings. You don’t have to file this form with the IRS. Links below to the necessary forms.

W-8BEN (Certificate of Foreign Status of Beneficial Owner For United States Tax Withholding)
Instructions for filling out Form W-8BEN

Send the completed W-8BEN form to susan @ bigdates.com

If you have questions about the W-8BEN, you can send them here: gcuw8 @ bigdates.com

You’ll notice there’s a box on the W-8BEN form asking for an ITIN. We’ll get into that in the next section. At this point, if you’ve decided paying 30% withholding is okay, leave the ITIN box blank and send the otherwise completed W-8BEN form  to Susan Tricca.

What do you do if you don’t want 30% withheld from your earnings, your country’s tax treaty with the US is less than 30% or zero, and you want to claim the benefit?
To claim the tax treaty benefit you’re entitled to, you will need to do some paperwork and fill out a W-7 form to get an ITIN from the IRS. Yes, this tax stuff is complicated and confusing, so we’ll do our best to help you out. If you’re really stuck, we suggest making a plea for help in the Forum asking fellow artists in your country for assistance. Links to the necessary forms below.

W-7 (Application for IRS Individual Taxpayer Identification Number)
Instructions for filling out Form W-7

On the form, you’ll be claiming Exception 1(d) to the stated requirement for a US tax return. This means you do not need to provide said tax return. This section is on the form for foreign citizens legally working in the United States.

To find your country’s tax treaty article number, check the Tax Treaty Countries and Article Numbers link above.

To go with your filled out W-7 form, which will have to be filed with the IRS, you will need a letter from GCU. Send a request for the letter stating you’re applying for an ITIN to gcuw8 @ bigdates.com or susan @ bigdates.com.

You will also have to include with your W-7 form certified copies of proof of identity and foreign status. These certified copies must be less than 12 months old. The only acceptable documents are:

  • Passport
  • National identification card (with photo, name, current address, date of birth, and expiration date)
  • US driver’s license
  • Foreign driver’s license
  • US state identification card
  • Foreign voter’s registration card
  • U.S. military identification card
  • Foreign military identification card
  • Visa (not the credit card)
  • US Citizenship and Immigration Services (USCIS) photo identification

If you’re sending a certified copy of your passport (not the passport itself) that’s the only document you need. Otherwise you will need certified copies of two other documents from the list.

How you get certified copies of your documents is something you’ll have to find out yourself. Every country has a different procedure. For example, in the Netherlands, I needed to call  my local City Hall for a certified copy of my passport. Getting a certified copy of a document may be as simple as going to your country’s equivalent of a notary public or you may have to go through a government agency. Either way, a fee will be involved. How much depends on your country.

Try a Google search for “certified documents + name of your country” in your native language. For example, a quick search for “certified documents Canada” yielded this result with the necessary information.

To go along with the certified document(s), you will also need an Apostille for each one. Basically, an Apostille is a form or stamp issued by your government that makes your certified documents legally acceptable to the US. Without an Apostille, your certified documents will not be accepted by the IRS and your ITIN application will be rejected.

Apostilles may be issued by local, county, state, province, or national government agencies. A fee is normally charged and you’re usually also required to include a simple letter with the request stating which country the Apostille is for.

To find out how to get an Apostille in your country, we suggest Googling “apostille + name of your country” in your native language. For example, a one-second search for “Apostille UK” resulted in this government website with all the information needed. Make sure you deal with a government agency, not a company offering to get your documents for a price. Such businesses charge whopping fees and it’s much, much cheaper to do it yourself. In our case, a business wanted the equivalent of $400. We did the paperwork ourselves and paid the government office only $10. Big difference!

Finally, you need a letter from GCU. Send a request to Susan Tricca – susan (at) bigdates.com.

Once you’ve filled out the W-7 form and attached your document(s) with Apostille(s), send everything to the IRS address you’ll find on the W-7 form. After that, you wait. We received our ITIN in about four weeks or so, but be patient. One way or the other, you’ll hear about the status of your request in due time.

Be aware if you’ve incorrectly filled out the form, attached the wrong documents, or failed to provide Apostille(s), the IRS will reject your application and you’ll have to start over from the beginning. Your documents will very likely not be returned.

What do you do once you have your ITIN?
Get in touch with Susan Tricca (her email address is above) if you’ve already given GCU a W-8BEN form.

If you haven’t given them a W-8BEN yet,  now’s the time to fill in the blank box asking for the ITIN. Once you’ve done that, send the completed W-8BEN form to Susan Tricca. And you’re finally done – congratulations!

While the task ahead may seem daunting, it’s really pretty simple once you strip out the jargon and get down to the basics. We hope we’ve answered at least some of your questions in the article and allowed you to make an informed decision.

Who Qualifies for an EIN?
If you are a recognized business entity in your country (as opposed to an individual), you can apply for an EIN instead of an ITIN. Both the EIN and ITIN are used to avoid double taxation.

What Do I Need to Do to Apply For An EIN?
There are several options for applying including by phone. Go to How To Apply for an EIN to get all the necessary information, including a link to Form SS-4.

Good luck!

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2 Comments leave one →
  1. August 20, 2013 11:21 am

    Wow, Corrie, that is so helpful that you have posted this! Thank you so much for spending your time to put this all together. I’m nearing the moment that I will really have to do something to do aout this – in the least to get the necessary information and insights, then set the necessary steps to have it all organised. I’m so happy to know that I can come in here and read up about it all, without having to plough through several forum topics. Bookmarking this! Thanks a lot!

  2. Audrey Drake permalink
    July 6, 2016 5:12 pm

    Yes, Corrie, I agree with Steppeland that this is very well put together. Thank you.

    However, there is a glitch in the procedure. At least for me, an international artist from Canada who has not collected any payments of earnings since January 2014. At the beginning, I was simply applying my earnings to my purchases so it was not a problem. But now I want to change that, and I have not been able to complete the first step.

    I wrote to Mike Fake – mike.fake@bigdates.com back in the middle of May, requesting the letter that will be required from GCU. There was no acknowledgement of my email. I wrote again on June 29th and copied in gcuw8@ bigdates.com, the other address you suggested. Still nothing.

    What do I do now?

    Thank you for any other suggestions.

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