Summary: this is a simple overview of how U.S. tax law affects payment of your film's royalties. This is not intended as tax advice and you should seek more specific advice from a tax advisor in your country.
If you are a content owner with a film generating revenue via U.S. video-on-demand (VOD) outlets, and you are domiciled (living) outside of the United States, the royalties revenue is subject to U.S. withholding tax of 30%.
The United States has tax treaties with most countries that allow content owners who are domiciled (living) outside of the U.S. to reduce or (generally) avoid the withholding tax of 30%.
You have 2 options:
1. Do nothing, in which case Kinonation is legally obligated to withhold 30% of the film's royalties as U.S. tax and to pay this to the U.S. Internal Revenue Service (IRS.) This may make sense if your film is not generating large royalty revenues, since the money you lose to the IRS may not be worth the trouble of filing U.S. taxes
2. File form W-8BEN Certificate of Foreign Status of Beneficial Owner for U.S. Tax Withholding (for non-US individuals) or W-8BEN-E (for non-US entities or companies).
Important: both form requires you to have either a U.S. Taxpayer Identification Number (ITIN) or a foreign tax identification number (foreign TIN)
A. For non-US individuals - Instructions for Form W-8BEN The relevant instruction parts are for Line 5, as follows:
"To claim certain treaty benefits, you must complete line 5 by submitting an SSN or ITIN, or line 6 by providing a foreign tax identification number (foreign TIN)."
So as long as you have a Tax ID number from your own country you can claim tax treaty benefits to avoid or reduce U.S. withholding tax
B. For non-US entities or companies -- Instructions for Form W-8BEN-E The relevant instruction parts are for Line 8, as follows:
"You must provide a U.S. TIN if you are: Claiming benefits under an income tax treaty and have not provided a foreign TIN on line 9b."
So if you have a foreign TIN provide it at line 9b
Apply for a U.S. Taxpayer Identification Number (ITIN) only if you do NOT already have a foreign tax identification number (foreign TIN)
The application process for U.S. Taxpayer Identification Number (ITIN) is as follows:
- You do not need to be a U.S. citizen or resident
- If you have a U.S. Social Security Number (SSN) or a U.S. Employer Identification Number (EIN) these can substitute for the ITIN.
- individuals apply for an ITIN using IRS form W-7 Application for ITIN
- companies or entities apply for a U.S. Employer Identification Number (EIN) using form SS-4 Application for Employer Identification Number
- Don't be intimidated, this form isn't as complex as it looks. Start by checking box a and proceed from there.
- More information on Obtaining an Individual Taxpayer Identification Number (ITIN) from Abroad.