If you are a US person looking for information on how to submit a Form W-9, please click here.
This article is a guide for non-US Authors including:
- How to Complete and Submit a Form W-8 to Envato
- Backup Withholding Tax
- Royalty Withholding Tax
- Getting More Help
- Frequently Asked Questions
If you are an author, your earnings will be subject to US backup withholding tax of 24% if you do not submit your tax information. It does not matter if you are a non-US person, your earnings will be subject to 24% backup withholding tax if you do not provide your tax information.
The purpose of the Form W-8BEN and Form W-8BEN-E is to establish your identity and status as a non-U.S. person. If you do not submit your tax information, the IRS requires Envato to assume that you are a US person and we have to apply the 24% backup withholding tax.
When you complete your tax information, you must also provide us a Tax Identity Number, otherwise, we are required to deduct royalty withholding tax of 30% on your sales to US customers.
What’s required?
Non-US Authors are required to complete a standard IRS form called Form W-8BEN (for individuals) or Form W-8BEN-E (for companies) which includes some basic information about you, including your Foreign Tax Identification Number (TIN) and country of residence.
An author account has one owner, and it is their details which should be in the tax information. That owner can be a corporation or other type of entity, but not a partnership. Partners must nominate one partner to submit their tax information. Withdrawals will only be made to the nominated partner.
How to Complete and Submit a Form W-8 to Envato
To help you provide this information quickly and easily, we have provided a form on Envato Market.
The form is available under Tax Information on your Settings page. You can also access the form by copying the following link and simply updating it with your username: https://themeforest.net/user/<username>/tax_information/new
We take your privacy and information security seriously and will use industry standard practices to securely store any details you provide in this form.
Detailed instructions for completing Form W-8BEN (Individuals) or Form W-8BEN-E (Entities) are available on the IRS website.
What will we do with this information?
When you complete your tax information, you are certifying that you are not a US person. The Form W-8BEN or Form W-8BEN-E form will determine the appropriate withholding tax rate that will be applied to your sales to US customers, if any (see Royalty Withholding Tax below). At the end of each calendar year we'll send to you and the IRS a summary of your earnings from US customers, Form 1042, so that you can accurately report your income to your local tax authorities and claim any credits for the taxes withheld and remitted to the IRS.
Backup Withholding Tax
If you are a non-US Author and do not provide your tax information, we are required under US tax law to treat you as a US Author and your earnings will be subject to 24% backup withholding tax.
Royalty Withholding Tax
Generally, transactions in digital creative content give rise to royalty earnings. If you are a non-US author, your sales to US buyers may be subject to royalty withholding tax, depending on your country’s income tax treaty with the US.
US tax law provides that the US government may collect taxes for US source royalty income. A royalty is considered to be US sourced when the sale is made to a person residing within the US.
Accordingly, if you are a non-U.S. person, your sales to US buyers may be subject to royalty withholding tax of up to 30%.
However, if you are a resident of a country that has an income tax treaty with the U.S., you may be eligible for a reduced withholding tax rate. The full text of these treaties can be found on the IRS website.
A list of the applicable treaty royalty withholding tax rates can be found here. The applicable rates applied are based on the copyright classification.
Any tax withheld will be remitted to the IRS - and not held by Envato.
Any tax withheld by Envato (either royalty withholding tax or backup withholding tax) will be remitted to the IRS. We will also be preparing and filing 1042 with the IRS that will show the amount of your gross earnings and taxes we paid from your earnings. You will be provided a copy of your Form 1042 from 15th March in the year following the year you made your earnings. These forms can be provided to your tax accountant to assist with claiming any tax credits that may be available in your home country.
Getting More Help
We’ve provided lots of helpful answers in the FAQs below, and we also have a step-by-step guide to help you complete your Form W8BEN or Form W-8BEN-E. Or, you can also email us at taxinfo@envato.com if you need more help. Of course, this has the caveat that you should always seek advice from a professional accountant/tax advisor because we can’t advise about your specific tax situation, including helping you complete your Form W-8BEN or Form W-8BEN-E.
Frequently Asked Questions
I don’t have a US TIN or a foreign tax identity number, what should I do?
If your country of residence has a tax treaty with the US, you need to include your Foreign Tax ID Number on your tax information. Your Foreign Tax ID Number is usually the number that you quote when you lodge your tax return or pay tax in your own country. To find your Foreign Tax ID Number, please see the guidance provided by the various jurisdictions and the OECD here. Alternatively, you may also find the guidance provided by the European Commission.
You may also apply for a US Tax ID Number by submitting a Form W-7 to the IRS. Here is a link to Form W-7 and this is the link to the instructions.
I need a letter from Envato to support my W-7 application for a Tax Identity Number, who should I contact?
As part of the IRS ITIN application process, an author may be required to provide a signed letter or document from Envato, on official letterhead, showing their name and verifying that an ITIN is required to make distributions to them during the current tax year that are subject to IRS information reporting and/or federal tax withholding.
If you require this document, please contact send a request at taxinfo@envato.com. You will need to provide us with your full name that matches the W-7 application. The IRS will not accept Usernames.
What happens if I don’t provide a US TIN or a foreign tax identity number?
If you are from a country with a tax treaty with the US, we can’t apply the benefit of the treaty rate reduction and will be required to apply royalty withholding tax at the full rate of 30%. But if you’re in a country that has no tax treaty with the US, it doesn’t matter as long as you complete your tax information so that the backup withholding tax of 24% does not apply to all your earnings.
Does this apply to US Authors?
No, this is a US tax form from the IRS (the US tax authority) for non-US Persons. A separate form (W-9) is applicable for US Authors.
What’s this for?
This process is needed to meet the IRS’ requirement that the appropriate taxes are applied to sales of digital products considered to be royalties.
What happens if I don’t complete my tax info until after backup withholding starts?
As any amounts withheld prior to receiving your tax information will be sent to the IRS, we are unable to give you a refund However, we will send you an earnings summary (Form 1099) which will show the earnings that you had and the taxes that you paid before your submitted your tax information. You may provide this statement to your tax adviser / accountant to see if you are eligible to claim tax credits in your country.
What happens if I pay Royalty Withholding Tax or Backup Withholding Tax, but I also pay my tax in my home country?
You should consult your accountant or tax advisor on how to ensure you’ve paid your correct taxes on your end of year tax return or if you are eligible to claim tax credits for the royalty withholding tax or backup withholding tax that was paid to the IRS.
How secure is my tax information stored with Envato?
We take your privacy and information security seriously and will use industry standard practices to securely store any details you provide in this form.
What documentation will I get about amounts withheld?
You will be able to see tax withheld on your statement page and we will also send you a Form 1042 from 15 March following the year you had your earnings.
Should I be seeking tax or legal advice?
Anytime you earn money as an independent contractor, freelancer, or through an online service, you should make sure you have informed your accountant or tax advisor so they can help make sure that you are correctly paying your taxes.
What if there are multiple owners of the account?
Envato Market enters into a legal agreement with the person who creates an account and agrees to the terms and conditions. If you are a non-US Person then you should complete the Form W-8BEN or Form W-8BEN-E details. An author account has one owner, and it is their details which should be in the tax information.
That owner can be a corporation or other type of entity, but not a partnership. Partners must nominate one partner to submit a tax information. Withdrawals will only be made to the nominated partner.
Does this apply to Envato Studio?
Yes, Envato Studio providers will be required to complete these details. If you are an Author on Envato Market, you only need to complete the tax information form once and we will ensure these details are applied to you Envato Studio account.
If I already pay taxes in my country for my earnings on Envato do I still need to provide the tax information Envato is asking for?
If you do not provide your tax information, , Envato will be required to withhold 24 percent tax from your gross earnings.
Will I be taxed twice if my country does not have a tax treaty with the US?
The answer will depend entirely on your country of residence.
If my country does have a tax treaty with the US how will that affect what info I need to supply to Envato?
If your country has an income tax treaty with the US, please fill out the treaty benefits portion of the Form W8BEN or Form W8BEN-E.
If my country has a tax treaty with the US how much tax will be withheld from my earnings?
Generally, an income tax treaty will provide for a reduced or zero rate of withholding on royalty income.
If I am a citizen of another country but live and maintain a residence or address in the US does that affect the tax information I must supply to Envato?
You will need to speak with your tax advisor, as circumstances and opinions may differ. We recommend that you speak with your tax advisor, as this may be a very fact specific question.
I am an international author so why is the U.S. taxing me?
US tax law provides that the US government may collect taxes for US source royalty income. A royalty is considered to be US sourced when the sale is made to a person residing within the US.
How will my earnings as an author be calculated after withholding tax is applied?
If the sale of a $49 WordPress theme is to a U.S. buyer.
The first thing is that in a $49 WP theme sale, $12 of that is our Envato Fixed Buyer Fee directly to the buyer. So the author’s Item Price is in fact just the $37.
Step 1: $49 - $12 = $37 is the author's Item Price
Next, we apply US Royalty Withholding Tax (RWT) and send this to the IRS. This changes based on the treaty rate between your country and the USA. Again, using your example, let's say the author's country doesn't have a treaty with the US and the RWT rate is 30%.
Step 2 (part 1): 30% of $37 = $11.10 to the IRS
The other thing that happens (at virtually the same time as the RWT is applied) is that we take our Author Fee. This will be based on the kind of author you are (exclusive or non-exclusive) and the amount you have sold on Envato Market. You can see these rates here.
Let's say for the purposes of this example that the author is an exclusive Elite author with an Author Fee of 12.5%.
Step 2 (part 2): 12.5% of $37 = $4.63 to Envato
These amounts are deducted in sequence from the author's earnings of $37:
$37 - $11.10 (to the IRS) = $25.90
$25.90 - $4.63 (author fee to Envato) = $21.27
Therefore the author will have a net earning of $21.27.