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, your royalty 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 30% withholding tax.
You have two options:
1. Do nothing, in which case Kinonation is legally obligated to withhold 30% of your film's royalties as U.S. tax and pay this to the U.S. Internal Revenue Service (IRS.) For some content owners having withholding taken out may make sense; for example, if your film is not generating large royalty revenues, the money withheld may not be sufficient to go to through the process 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 forms require 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 We recommend that you read and understand these instructions, paying particular attention to the instructions 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)."
You must have a Tax ID number from your country of domicile in order to claim tax treaty benefits and avoid or reduce U.S. withholding tax
B. For non-US entities or companies -- Instructions for Form W-8BEN-E We recommend that you read and understand these instructions, paying particular attention to the instructions 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."
You can 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.
- You can obtain more information from the US IRS on Obtaining an Individual Taxpayer Identification Number (ITIN) from Abroad.