Why am I getting taxes withheld from my sales?

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. For the sake of clarity, the US government will not levy tax against a sale between two non-US persons.

Do note that 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.

When you fill out your W8-BEN form, Part 2 on the W8-BEN is optional. You may fill out Part 2 of the in order to avail yourself of a lower tax rate for your US-source sales of products and bundles, which has been negotiated between your government and the US. By claiming the benefits of your tax treaty, Creative Market will only withhold at this negotiated rate

For example, if you are a Bangladesh tax resident, Article 12(2) of the applicable treaty states that the US government may levy a 10% tax on US-source royalty income. This tax is then collected through withholding.

If you choose not to fill out Part 2 of the applicable form, then CM will be required to withhold at a 30% rate, until such time as you fill out the claim for treaty benefits. Note that if your country does not have a tax treaty with the US, we are required to withhold 30%.

Generally, filling out these sections of the proper forms may only result in a reduction to your potential tax liability. However, as each country has vastly different laws surrounding the types of income that are subject to tax, we suggest that you consult with your tax advisor to determine how your country will tax the income in question.

Have more tax questions? See our detailed Tax FAQ here:
US shop owners  |  International shop owners

Disclaimer: Creative Market does not provide tax advice. For further information and to ensure you are complying with tax laws, please consult a tax professional.

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