Has anyone submitted a W-8BEN form?

  • Hi,

    I was wondering is anyone here has ever submitted a W-8BEN form to a client? This form is for non-US people who earn an income from the US to claim a reduced rate or exemption from withholding taxes.

    As an Indian, I can claim Tax Treaty Benefits of withholding tax on Royalties. But the client has deducted the percentage from my advance. Is that how it's supposed to be?

    I was under the assumption that the income earned after the advance amount is considered as royalties, and that the tax would be applied on that amount?

    Any guidance would be much appreciated!


  • Pro

    @Neha-Rawat I'm not 100% percent sure on how it is with India - I submitted W8BEN's before as a Canadian but it might be a bit different because different countries. In my case, the W8BEN's purpose was so that I am not taxed in the US and then again by Canada. With the tax treaty between the US and Canada, I am entitled to pay taxes only in Canada for my work and the W8BEN basically acted as a way to tell clients and my agent NOT to take any taxes from my payments, whether royalty or others, because I'm going to be paying tax income in Canada later. So in practice, no US company has ever deduced any percentage from my payments.

    On the W8BEN you have to cite the exact tax treaty with your country. I would say Google it and read it again, maybe google to see if you can find an explanation article of that treaty, to make sure what it entails exactly?

    My instinct would be that this scenario with the publisher is wrong and they shouldn't have taken out the percentage. An advance is actually called "advance on royalty", it's still royalty just paid out in advance. You'll only get additional money after that if and when your royalties supersede the amount already paid out to you. So the advance is still a royalty payment and if your tax treaty says the US should not tax you on royalties, then I think the publisher got it mixed up. But of course, research and asking the publisher about it are the only way to know for sure.

  • @Neha-Rawat I submitted one of those W-8BEN forms from the UK for my US photo agents and don't pay any taxes in America on any royalties or commission payments. I just had to supply each agent with a copy of the form for their records.

  • @Neha-Rawat I've filled W-8BEN form. The publisher nearly cut off 10% from my royalty because my nationality is Indonesia but as a resident of Austria, I don't have to because the tax treaty is 0%. Check out your country tax treaty rates here (this document I got from one of my publisher): Excerpt of Table 1 Tax Treaty Rates on Copyright-Royalty.pdf

    Did you already ask your agent if this normal for advance on royalty?

  • @NessIllustration @sigross @lenwen Thank you so much for your replies. I did check out the official IRS link for India and it does say that the withholding tax as per the tax treaty benefit is reduced from 30% to 15% (which is what the client deducted from my advance). But 15% still seems a lot and I was not clear on what amount it would be deducted from (thanks Vanessa for clearing that doubt).

    I did manage to connect with 2 other Indian illustrators, one of whom has always had 15% deducted from every payment made to her and the other who has never had any tax deducted on royalties (she also left the tax treaty benefit section blank which technically should have hit her with a 30% withholding but somehow she's been lucky with 0% tax on multiple projects).

    So, my confusion is still there and I am now trying to get a hold of a lawyer or CPA who can help explain US tax laws 😅

    Thank you all for your time and help!

  • Pro

    @Neha-Rawat I guess that clears it up, with the W8BEN you should expect 15% deducted from payments 🙂 It sounds like that one illustrator worked with shady publishers who weren't all that on the up and up about collecting tax... But that doesn't change the law, if that treaty says black on white that it's 15%, then that's the one I'd believe! Good luck 🙂

Log in to reply