Tax forms to receive payment from USA

This resource takes you through the forms you need to complete when working for, and receiving payment from, a US based commissioner if you are not a US tax payer. Some of this advice is specific to UK illustrators, we have indicated where to source information if the different details are required if you live outside of the UK

You will need to complete the paperwork in order to receive your full payment, without US tax being deducted.

All countries have their own forms and processes, which you can read about in the AOI resource here.

[hidden title="Limited Companies"]
Getting an EIN
If you are a limited company you must have an EIN number which is issued by the IRS – the US tax department. This can take 8 – 10 weeks to arrive – but once you have an EIN it does not need to be renewed.

Completing a W-8 BEN-E
Once you have your US EIN number you should complete the W-8-BEN-E Document to avoid withholding tax.

It’s important that you download the form from the IRS, or ask your commissioner to send one. The form changes periodically and may be rejected if it is not the most current.

Completing this form will differ from organisation to organisation and you should read the guidance and seek legal advice if required. However you may wish to consider these pointers;

While it is a long form, much of it is not applicable. You may complete;
Part I (Identification of the Beneficial Owner). You may select ‘Passive NFFE’ in Section 5.
Part III (Claim of Tax Treaty Benefits). You should note your resident country in 14 a and complete 14 b or c.For 15, if you are based in the UK you may wish to note that Royalties are exempt from withholding tax under the provisions of article 12 (outside of UK? see * below)
Part XXVI (Passive NFFE) As a foreign entity you should select 40a and b or c as applicable.
Part XXX (Certification) Date and Sign.

There is a single Sheet format of the W-8 BEN 8E form, but since July 2017 most commissioners will want the full form completed.

Once it is complete it should be sent to the commissioner.

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[hidden title="Individuals"]

There are two forms that individuals who are not USA tax payers should complete and send to commissioners – a W-8BEN and a W-8IMY (the W-8IMY is for use if the contract is between a US client and a UK illustrator with a UK Agent, who acts as an intermediary). Clients often overlook the second – however you should ensure that you have up to date versions of the forms which are sent with your invoice to all USA based clients.

The forms last for 12 months. You can send the same form to all clients in the USA, but some clients ask for a new version. There is no reason why you can’t have more than one version of the form active at any one time.

It’s important that you download the form from the IRS, or ask your commissioner to send one. The form changes periodically and may be rejected if it is not the most current version.

Completing a W-8 BEN Form
Check that this is the right form for you to complete – there is a quick checklist at the top. While this form is for all non-US citizens, completing the form will differ from individual to individual. This is guidance only, and you should read the IRS issued guidance notes and seek legal advice if required.

Part I (Identification of Beneficial Owner) Enter your details, noting N/A for 5 and 6 (if appropriate).

Part II (Claim of Tax Treaty benefits)

Point 9 Enter the country of residence.

Point 10 Special rates and conditions

Following ‘The beneficial owner is claiming the provisions of Article and paragraph’ you can put Article 12, paragraph 1 as the reference, and a ‘0%’ rate of withholding on income.

The specific ‘type of income’ will be: ‘Royalties’.

Note the term ‘royalties’, as relates to illustrators, means payments of any kind received as a consideration for the use of, or the right to use, any copyright of an artistic work. (Article 12 UK Treaty). This includes licensing of the work.

‘Explain the additional conditions in the Article and paragraph the beneficial owner meets to be eligible for the rate of withholding:’ here you say “Royalties [or whatever the type of income involved is – as long as it is covered by Article 12] are exempt from withholding tax under the provisions of Article 12”.

*Part II above relates to the treaty between UK and US only, we don’t keep lists of treaties between other countries so if you’re based outside of the UK, you can refer to this article here which lists a number of deals in specific regions such as Ireland, Germany, and Spain. If your country is not in the list you will need to approach an accountant in your region to research the correct Treaty Article, Treaty Section and Tax Rate.

 

Part III (Certification) sign and date

Withholding statement – W-8IMY form
This should be submitted with the W-8BEN form.  You can complete it:

Part 1:
Column 1 (Name of Client / Partner) Enter your name.
Column 2 (Type of Form attached) Select W-8BEN
Column 3 (Recipient Type) Select Beneficial owner
Column 4 (Basis for reduced rate) Treaty Benefit

Part 2:
It is likely that you will select the check box No Clients Partners receive additional income, however if you do receive income from a difference Agency you should complete the table.

Part 3:
This section is not relevant as you are an individual.

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[hidden title="The W9 Form"]
W9 Forms are for USA citizens. If you are not a USA tax payer, you should not complete this. Some clients may send you this form in error, however you should ask for W-8 BEN and W-8IMY forms instead. These forms are applicable for anyone based anywhere outside of the USA.

You do not need a TIN (Tax identification number) if you are not registered for tax in the USA.

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This resource is advisory only. It has been developed with kind support of Jonathan and Anthony Allman at Debut Art.

 

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