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 ofthat 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.