United States Persons: Generally, "United States persons" include citizens or residents of the U.S. (including green card holders or U.S. resident aliens that satisfy the 183 day "substantial presence test"), and partnerships or corporations created or organized in the U.S. or under the laws of the United States.
If you are a U.S. person, please fill in form W-9 from your store settings.
For U.S. persons, the purpose of a Form W-9 is to provide your identifying information (name, address, TIN, tax classification, etc.) and establish your status as a US-person. We are required to obtain a U.S. taxpayer identification number ("U.S. TIN") from each U.S. person prior to making payment. If we do not receive a valid U.S. TIN (e.g., SSN or EIN), then we are required to withhold 30% of your gross payments and deposit the amounts with the IRS.
Non-United States Persons: If you are a non-U.S. person, then any royalty payment that we make to you with respect to creative content used in the U.S. is generally subject to a 30% withholding tax. 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 rate or exemption from withholding.
You can find all existing treaties here: https://www.irs.gov/pub/irs-trty/
The articles relating to royalties will generally be Article 12 or 13.
Please consult your tax advisor to determine if a treaty benefit may apply between the U.S. and your country of residence.
The purpose of the Form W-8 is to establish the following:
Your identifying information (name, address, TIN, etc.) and tax classification for U.S. purposes (e.g., individual, corporation, partnership, etc.);
Your status as a non-U.S. person; and
Whether a lower rate of or exemption from withholding applies as the result of a treaty claim.
In your store settings, please fill-in and save the according form:
- If you are a non-US individual, please use Form W-8BEN
- If you are a non-US entity, please use Form W-8BEN-E
Q. If I don't fill out the tax section in my store will any of my earnings be withheld? If so how much?
A. For a US store owner, 28% of earnings will be withheld. For a foreign store owner, 30% of your earnings generated on sales to US persons will be withheld.
Q. Do I need to pay tax to the IRS directly?
A. Cubebrush will be collecting and remitting any withholding to the IRS. The U.S. government will not expect you to self-assess this tax.
Q. The bulk of my Cubebrush earnings were from sales I made in a previous year. If I withdraw those earnings in a subsequent year do I show those earnings on the current year’s taxes or do I need to amend the tax forms I submitted last year?
A. US income tax rules require that your sales be reported in the year they occur. The time that a store owner requests payout is generally not determinative.
Q. Does the amount of my Cubebrush earnings affect what tax information I need to supply or the amount (if any) that will be withheld?
A. At this time, all store owner on Cubebrush must provide their relevant Form W-9 or W-8.
Q. Are my Cubebrush earnings classified as royalties? If so how does that affect what tax information I need to supply to Cubebrush and what (if any) earnings will be withheld?
A. Generally, transactions in digital creative content gives rise to royalty earnings. If you are a non-US store owner, your earnings may be subject to withholding based on your country’s income tax treaty with the US.
Q. If I am a US citizen but live and maintain a residence or address in another country does that affect the tax information I must supply to Cubebrush and/or how much (if any) of my earnings will be withheld?
A. US citizens must provide a completed Form W-9. Once received, Cubebrush will no longer be required to withhold on your earnings.
Q. Do I need to supply all of the tax information Cubebrush asks for or can I choose to only supply a portion? If the latter does that affect how much (if any) of my earnings will be withheld?
A. The IRS requires that the relevant forms be filled out completely. The absence of required tax information may result in (additional) withholding.
Q. Are you asking for this tax information so that you can report it to the US or my country in order that they can tax me?
A. The information being collected is for US income tax reporting purposes only.
Q. Do I report my total amount of sales for my taxes or the revenues I get after Cubebrush takes their percentage?
A. Currently, PayPal will be issuing 1099 forms to store owners who meet a certain revenue threshold defined by the IRS and store owners will be required to list the amount listed on the 1099. Store owners will only be reporting their revenue net of Cubebrush’s fees. This is the amount which would show up on a seller’s 1099.
Q. When will Cubebrush issue 1099s?
A. When we implement our direct deposit feature for payouts.
Q. For VAT purposes is the store owner or Cubebrush the seller of my content?
A. For VAT, and the recent enactment of the mini one stop shop rules, Cubebrush will be treated by the EU as the reseller of your content.
Q. How does Cubebrush collect VAT when I sell a product?
A. Cubebrush automatically adds the corresponding VAT to orders from EU residents; as a seller you will not notice any change on your end.
Q. What are the mini one stop shop rules?
A. This is the name of the new VAT rules for electronic downloads/services.
Q. Will Cubebrush provide information collected on all VAT charged to people who buy my products so that I can file my taxes?
A. VAT, just like regular sales tax, will all be documented on your "Customers" page so that you can fill in your taxes properly.
Q. Can we choose to block sales in our stores to buyers in specific countries so we can avoid having to charge VAT?
Q. Do store owners in the US have to comply with the changes to VAT laws or just citizens of an EU member state?
A. The changes to the VAT laws impact all persons that sell a product to a resident in an EU member state. It's a messy law, but thankfully we handle it all for you.
Q. If a buyer makes a purchase using a credit card that is registered to a tax-exempt organization how does that affect what VAT must be charged and how does it affect the amount (if any) of a store owner's earnings that are withheld?
A. VAT is charged in addition to the purchase price and should not affect the remittance to a store owner.
Q. May I opt to charge buyers directly for any taxes my state or country requires instead of supplying the tax information Cubebrush is asking for?
A. No. As a marketplace, Cubebrush is required to provide the requested information to the IRS.
Other international questions
Q. How can I find out what my Foreign Tax Identifying Number is?
A. This is typically the identifier that you list on your annual tax returns. If you are a legal entity, this will be the identifier listed on your organization’s tax return.
Q. If I already pay taxes in my country for my earnings on Cubebrush do I still need to provide the tax information Cubebrush is asking for?
A. Yes. Cubebrush is requesting information in order to report that portion of your income that US tax laws deem to be derived from a US source. Absent this information, Cubebrush will be required to withhold 30 percent of your gross sales.
Q. How can I determine if my country has a tax treaty with the United States?
A. Please see the following link for complete listing of all US tax treaties:
Q. Will I be taxed twice if my country does not have a tax treaty with the US?
A. The answer will depend entirely on your country of residence.
Q. If my country does have a tax treaty with the US how will that affect what info I need to supply to Cubebrush and how will it affect what if anything will be withheld from my earnings?
A. If your country has an income tax treaty with the US, please fill out the treaty benefits portion of the Form W-8BEN or W-8BEN-E (as required). Note that Cubebrush auto-fills that potion of the form with the most common results for your convenience, but you should always double check the content of the form. Generally, an income tax treaty will provide for a reduced or zero rate of withholding on royalty income.
Q. 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 Cubebrush and/or how much (if any) of my earnings will be withheld?
A. We recommend that you speak with your tax advisor, as this may be a very fact specific question.