Tax from the US
Hi.
Does anyone have any experience with the Taxing from US?
I am assuming they will always tax you.
Also has anyone used IAD on IOS. I am in the process of releasing a game and upon registering i was confronted with document 8233 for tax exemption.
Not sure if i am understanding it correctly but it appears i need to apply for a ITIN (individual Tax Information Number) with the IRS in the US.
Does anyone have any experience with the Taxing from US?
I am assuming they will always tax you.
Also has anyone used IAD on IOS. I am in the process of releasing a game and upon registering i was confronted with document 8233 for tax exemption.
Not sure if i am understanding it correctly but it appears i need to apply for a ITIN (individual Tax Information Number) with the IRS in the US.
Comments
I hate paperwork. Busy doing all that stuff now. :(
SS-4: http://www.irs.gov/pub/irs-pdf/fss4.pdf
Usually then the vendor will ask for a W8 form, which is what exempts you from US tax if you have the EIN/ITIN number (which you apply for with the SS-4). I hope that all makes sense..
For us this was as simple as calling the IRS, answering a bunch of questions, being told our EIN after 15 minutes and filling out a W8-BEN to prevent withholding on payments made to us. I've recently had to fill out a W8-BEN-E for a few stores seeing as the old forms are going out of date (but the tax treaty remains the same, so we don't get taxed by the US - or even have any money withheld that we'd then need to claim back).
-edit- Also, just to clarify: The US can't tax you if you're paying your taxes as an SA company. What they can do is withhold something like 30% of the money you get paid in case they need to tax you later and they stupidly let all that money out of their country and you're not giving it back to them. The way to get round this is to let the people paying you be able to tell the IRS that these payments are to someone that's tax-exempt and thus withholding would be pointless. You do that by giving them a W8 to wave at the IRS when needed... If you do get your payments withheld, you can claim that back from the IRS once the tax period expires. Technically. Although I have no idea how to do that.
What I've done now is requested a contract for iOS Paid Apps, filled in contact, banking and tax info (which is just me declaring that I am the owner of the corporation, it seems). Then the application was process... And then I just checked, it seems that it's gone through already, unexpectedly quickly.
I have no idea if I have to do the tax forms you guys are talking about, is it something to talk to my accountant about, or should the distribution channel tell me about it?
What I did for all US stores/retailers/bundlers I've worked with:
-All needed a W8 form.
-W8 form needs EIN or ITIN number (EIN in my case).
-Apply for EIN number with the SS-4 form.
-Fill out SS-4 and phone IRS; they give you the number.
-Use EIN number on all W8's you need to send.
The new W8-BEN-E is confusing, but you don't have to struggle to fill out the whole thing. It's actually self-explanatory as soon as you figure out which bits you don't need.
@Tuism: Apple is going to ask you for a W8 as soon as they have to pay you. Apple needs this because they're a US company paying money to someone outside the US, that's all this is about - Canadian tax has nothing to do with it... Once you're through the registration hoops with the whole DUNS number stupidity, it all moves pretty fast from Apple's side.
Also, this link might be very useful here: http://blog.draknek.org/post/94112319182/form-w-8ben-e-for-uk-limited-companies
Sorry for the late response. They didn't send it to me. I picked up in the 8233 form that i mentioned ITIN requirements and noticed its definitely a requirement.
Apple required you to send a copy that you did apply for an ITIN. In the meantime if your game is released they hold on to your monies until your paperwork is sorted and approved
Frankly i find the entire process a bit cloudy and im still piecing things together. ITIN is applied for. But now i read stuff about EIN numbers. So i guess i will just apply for that as well.
Anycase. EIN can be applied for online
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online
Do you think phoning is sufficient for getting an ITIN?
Posting it cost me R750 with DHL. Its daylight robbery.
How to fill out the W-8BEN-E:
First off this was invaluable. I was totally floundering before I read this (repost from earlier in the thread)
http://blog.draknek.org/post/94112319182/form-w-8ben-e-for-uk-limited-companies
One addendum:
The article skips out section 5. This seems incorrect. You should be an Active FFE and fill out part XXV accordingly (which is just a tickbox) - thanks @dislekcia for that info EDIT: It seems the article was correct. See next post on the Steam process.
EIN:
There is some consternation (in another thread) as to whether an EIN is necessary (and if you read the IRS supporting docs you will only end up horribly confused). In the end I decided it's easy enough so I phoned the IRS and got one for Made With Monster Love while I was on the line. Total call time was 35mins (about 20 being hold) and it cost just over a $1 of skype credit. Phoning seems to be the only option, as the online application is only for domestic applications. Add the end the lady said something about I'll be sent info telling me what returns I'll need to file, which was a bit "huh!?!" but she couldn't tell me more.
You don't need to fill out an SS4, but you're basically filling it out telephonically. Why you're typing through a human being on the other side of the world instead of a computer I have no idea, but I did find having the form in front of me made life easier, especially when she was referring to various sections.
So all in all once you know what you need it's pretty simple. Before then it was literally one of the most horrible things I've ever attempted to fill out.
Two notes:
According to Steam you can leave out section 5 and part XXV - as per the article above. I'm inclined to believe steam in this case.
Second:
It fills in line 15 as: Royalty Copyright - 0%
Also they say this about EIN: I'm still not sure if a SARS Income Tax number counts as a Foreign TIN, so still glad I've eliminated any ambiguities by applying for one.
Why its 0% is beyond me because according to my lawyer i qualify as an individual for %15 reduced tax. So i need to follow up with valve regarding this.
It's a 0% rate because that's the lowest it can go. That means that, because of tax treaties between SA and the US, people in the US can pay you ALL of the money you make through them, instead of having to keep 30% of it back just in case you actually have to pay tax on your earnings within the US. In SA, we still pay tax on those earnings, but we pay it to SARS, not the IRS.
If you can prove that you're operating from South Africa, you don't owe any tax on US earnings to the US, so you are exempt from withholding, hence you have a 0% withholding rate. That's what all this is about - giving the people that pay out to you proof that they can use if the IRS goes "Hey! Why aren't you keeping money back to cover any potential taxes for those people?".
The 15% reduced tax sounds like it's either a local taxation thing, or it's a special case in withholding law. Either way it's irrelevant to getting paid by Valve and I have no idea why your lawyer would be talking about it.
in all fairness the lawyer doesn't really deal with these things but i insisted they investigate. They been pretty good on other fronts though :p
So just to add here in case someone else wonders. I'm signing a month long job with a company state side and even as an individual you only need an EIN number. The ITIN is for if you are filing taxes in the states. And as said before the EIN is giving to you over the phone.
It was at this moment that I realized I probably know a bit too much about US tax number applications >_>
@watson is there any reason why you are trying to apply as an individual?
Setting up a company can be a bit of a pain, but as a sole proprietor they're relatively easy to maintain, and there are some nifty legal benefits, which I can't exactly remember right now.
Also IESA works with companies which has the nice thing of being able to go on a trademission like Gamescom ;)
Also I'm pretty sure @LexAquillia can better explain why companies are good and useful, and if you want to set one up I really recommend poking 'em for lawyer work :)
Does anyone know if a South African Pty (Ltd) is a corporation or a LLC in US terms? You need this kind of detail to complete the SS-4 (to get a EIN).
@Karuji ...thank you for the clarification
A few notes on the process (4 years after original post):
- You don't need to complete the SS-4 form at all. Phone 001-267-941-1099 (this is what you phone if you're inside SA at the time, i.e. it already includes the international dialing code for the US) and answer a few easy questions such as your full name and your address and whether you have the power to do what you're trying to do. You will have your EIN within minutes. Oh and phone between 13:00 and 01:00 because their office hours are 07:00-19:00 (Washington, D.C. time)
- Apple in iTunes Connect asks you a few questions before generating only the parts of the W8-BEN-E that you need to complete. The W8-BEN-E downloadable pdf instructions are horrendous and you really need proper instructions in English. This still works (even though it's for UK companies, it seems - in my very limited legal knowledge - to apply to SA): http://blog.draknek.org/post/94112319182/form-w-8ben-e-for-uk-limited-companies. The only thing missing is that you just tick the main 14.b) box and not the 'sub'boxes. Unless, of course, you are a government entity or similar.
The contract is processed within about 30 minutes after which you're ready for in app purchases or paid apps.
It took us months to figure out this was the problem with our in app purchases not working. We thought it was a problem with the code... *sigh*
Once you receive your EIN you can use it to complete forms where the EIN is not being automatically validated.
Automated EIN validation systems, can however, take up to two weeks, before your EIN is active.. ;)
Have I done something wrong?
I just don t have my TIN my number so I couldn't complete the form.