Fotolia has just launched the Tax Center. As we've already seen for Shutterstock, Fotolia is announcing that “Selling creative content licenses is an economic activity and, as a Fotolia contributor, income derived from these sales in the US may be subject to U.S. IRS (Internal Revenue Service) withholding tax“.
Using the Shutterstock experience, I can say that for most of us it will be necessary to fill the W-8 BEN form online: submitting to Fotolia as an individual and resident in a country that has a tax treaty, it’s easy to submit Form W-8 BEN online without Tax ID (ITIN).
Here the list of the countries that have a tax treaty with the US. I suggest to wait for some more information about the new tax center; meanwhile I prepared a couple of printscreen to explain how to fill the module: Part I, Part II and III. Data are referred to Italy with Treaty Article 12(2), Withholding Rate Images 5%, Withholding Rate Motion 8%. You can find your Country values in the list mentioned above.
Per i lettori Italiani, il modulo dei printscreen è compilato con i dati relativi all'Italia, dovrebbe essere corretto ma direi che è il caso di attendere un input ufficiale da parte di Fotolia (annunciata la stesura di FAQ) prima di provvedere alla compilazione online del W-8BEN.
Aggiornamento del 2 Dicembre, consultare:
Fotolia Tax Center – aggiornamento Italia
UPDATE Nov. 30 09
Waiting for a Fotolia Tax Center FAQ, if you want to understand something more about W-8BEN, IRS and Withholding Taxes, it would be useful to read the Veer/Corbis thread about FAQ: Withholding Taxes. There's an important comment saying “To receive the treaty rate, a US ITIN number is not required on the W8-BEN form as long as you are the rights holder for all submitted content”… same thing I understood reading the huge Sutterstock's forum threads. Fotolia seems to say something different: NO ITIN, NO treaty rate for the US sell… let's wait for something more detailed.
UPDATE Jan. 8 2010 Finally Fotolia follows the other agencies (thanks to Luis Santos of ministocking.blogspot.com that points it out to my attention)
From the English Fotolia forum, Daniela Moderator:
Fotolia will conduct a review relating to ITIN requirements and tax treaty rates for foreign residents who submit withholding tax forms such as Form W-8BEN. During this period, Fotolia will change the current procedure for foreign contributors when submitting Form W-8BEN. If you are a resident of a country which has a tax treaty with the U.S., an ITIN/EIN will not be required with submission of the W-8BEN to enjoy tax treaty benefits. All other form requirements will remain in effect.
Foreign residents in non-tax treaty countries will be subject to withholding at the standard 30% rate on U.S. sales. If an appropriate tax form is not submitted, withholding is applicable on all Fotolia sales at the standard 28% rate.
Contributor earnings statistics will be adjusted effective January 1, 2010. We encourage contributors without an ITIN to complete Form W-7 to get an ITIN number . Pending the outcome of this review, ITIN/EIN submission requirements may be revised in the future.
Thanks for that quick info
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Fantastic post, highly useful. Thanks Rob 🙂
Thanks for your help
Rob, what would be the article for the capital gains witholding agreement, and does this treaty mean the US informs italian authorities on your capital gains or should you do that by yourself?
Thanks a bunch
I'm sorry but your questions are too specific for my fiscal knowledge. I think you should declare it by yourself deducting the quote already withheld by Fotolia.
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