Tax FAQ for Foreign Shop Owners
Non-United States Persons: If you are a non-US person, then any royalty payment that we make to you with respect to creative content used in the US 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 US, you may be eligible for a reduced rate or exemption from withholding. The full text of these treaties can be found on the IRS website. Please consult your tax advisor to determine if a treaty benefit may apply between the US 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 US purposes (e.g., individual, corporation, partnership, etc.);
- Your status as a non-US person; and
- Whether a lower rate of or exemption from withholding applies as the result of a treaty claim.
Accordingly, please provide the following:
- If you are a non-U.S individual, please complete and submit Form W-8BEN.
- If you are a non-U.S entity, please complete and submit Form W-8BEN-E. Note that based on your residency and entity classification for US tax purposes, you may be required to submit a separate IRS form (e.g., Form W-8ECI, W-8EXP or W-8IMY). The rules relevant to each type of legal status are contained in the IRS forms and instructions which may be obtained by visiting the IRS website (click on the "Forms and Pubs" tab and enter the form number). Please consult with your tax advisor to determine which form is applicable to your business.
Q. I am an international seller so why is the US taxing me?
A. 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.
Q. If I already pay taxes in my country for my earnings on Creative Market do I still need to provide the tax information Creative Market is asking for?
A. Yes. Creative Market is requesting information in order to report and remit that portion of your income that US tax laws deem to be derived from a US source. Absent this information, Creative Market will be required to withhold 30 percent of your gross sales.
Q. Do I need to supply all of the tax information Creative Market asks for or can I choose to only supply a portion?
A. The IRS requires that the relevant forms be filled out completely. The absence of required tax information may result in (additional) withholding.
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. Does the amount of my Creative Market earnings affect what tax information I need to supply or the amount (if any) that will be withheld?
A. No, at this time, all shop owners on Creative Market must provide their Form W-8BEN.
Q. If my country has a tax treaty with the US how will that affect what info I need to supply to Creative Market 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 W8-BEN or W8-BEN-E (as required). Generally, an income tax treaty will provide for a reduced or zero rate of withholding on royalty income.
Q. Do I need to pay tax to the IRS directly?
A. Creative Market will be collecting and remitting any withholding to the IRS. The US government will not expect you to self-assess this tax.
Q. Are my Creative Market earnings classified as royalties?
A. Generally, transactions in digital creative content gives rise to royalty earnings. Your earnings may be subject to withholding based on your country’s income tax treaty with the US.
Q. How can I determine if my country has a tax treaty with the United States?
A. Please click here for the complete listing of all US tax treaties.
Q. What is a Form 1042-S?
A. This form reports the amount of your gross sales on Creative Market that may be taxable in the US, as well as any amounts required to be withheld from your sales and/or affiliate commissions.
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.
Q. Do I report my total/gross amount of sales for my taxes or the 70% I get after Creative Market takes their percentage?
A. Shop owners will be required to list the gross amount shown on their Form 1042-S.
Q. What time period does my 1042-S cover?
A. The 1099 covers one calendar year (Jan 1st through Dec 31st).
Q. Does Form 1042-S show Royalties based on gross sales to US persons and non-US persons combined?
A. No, the form only shows the gross sales to US persons. Therefore the amount you see on the Form 1042-S may be less than the amount shown in your account listed as “Total Revenue.”
Q. The bulk of my Creative Market 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 shop owner requests payout is generally not determinative.
Q. Does the gross amount on the 1042-S include money I withdrew and money I left in my Creative Market account?
A. Yes, the IRS considers all sales as part of the gross amount regardless of whether or not you withdrew none, some, or all of your earnings.
Q. Are all foreign sellers getting a 1042-S?
A. You will receive a 1042-S unless you fall under one of the following situations:
- You will not receive a 1042-S if your product sales were $10 or less. Please note that if you had affiliate commissions, but no product sales you will not receive a 1042-S and we don’t report affiliate commissions in a situation like that.
- You will not receive a 1042-S if you failed to provide an address or entered the wrong address.
- You will not receive a 1042-S if you changed your address after we pulled the information to mail it.
Please note that in the situations above you can still find your gross Royalties and breakdowns here: https://creativemarket.com/account/taxes/statements
Q. Why haven’t I received a 1042-S for both of my shops?
A. If you have more than one shop you will only receive one if you indicated the same info on your W-8BEN for both. The Royalties listed would be the gross for product sales and bundle commissions for all shops you own. The Other Income listed would be the total amount of affiliate commissions for all shops you own.
Q. Where can I find my tax statement
A. Creative Market provides you with a tax statement PDF which you can easily download. It is important to note that this is not an official government tax document however, it does include the numbers which we report to the IRS.
This statement is typically available before the official tax documents are mailed and allows you to get a head start on your taxes.
Total Gross Royalties: This is the total amount of sales your shop generated before any tax withholdings or Creative Market’s cuts, including bundles.
Gross Product Sales: Total amount of product sales (non bundle), before tax withholdings, or Creative Market’s cut.
Gross Bundle Commissions: Total amount of bundle commissions, before tax withholdings, or Creative Market’s cut.
Total Net: This is your final earnings for all products, including bundles, but less tax withholdings and Creative Market’s cut.
Net Product Sales: This is your total final earnings for product sales (non bundle), less Creative Market’s cut and tax withholdings.
Net Bundle Commissions: This is your total final earnings for bundle commissions, less Creative Market’s cut and tax withholdings.
Amount Withheld: Total amount withheld and paid to the IRS based on your tax status and tax treaty with the U.S. Read more on tax withholding.
Q. Why does my sales page not match what’s on my 1042-S?
A. Your sales page may not match up where it lists Total Revenue because of things such as discounts, bundles, etc. The Sales page is not a tax information page. In addition, the 1042-S only shows the gross sales to US persons.
Q. Are refunds included in the gross on my 1042-S?
Q. Is the amount on my 1042-S the correct?
A. Yes, the number reported on the 1042-S is the gross amount of royalties earned by each Shop Owner for product sales and bundle commissions. The number (if any) under Other Income is your gross affiliate commissions. Please note that these numbers represent only sales to US buyers.
Q. Why did Creative Market report the gross and not the net on my 1042-S?
A. US federal income tax law requires that Creative Market report the royalties earned by Shop Owners, as the gross amount (i.e., prior to reduction for the fees charged by Creative Market). Our legal counsel instructed that this is the proper method of reporting. Please note that we are unable to comment on the operations of other businesses that may or may not do this differently.
Q. How do I find out what Creative Market’s cut was versus my net?
A. The breakdown of the numbers reported on your 1042-S can be found here.
Q. How do I get the money that was withheld back once I receive my Form 1042-S?
A. These withholdings generally cannot be recouped by filing your Form 1042-S with the IRS. The withholdings are the amount of tax we sent to the IRS and represent the cost of selling in the US. However, some countries do provide for a tax benefit related to taxes paid in a country other than your own (i.e., your taxes in your home country may be reduced as a result of being taxed in the US). As the tax laws in every country can vary greatly, please consult a tax advisor in your country.
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. What if I am a foreign shop owner conducting a US trade or business? How do I get the money that was withheld back once I receive my Form 1042-S?
A. In such a case, it may be possible to file your 1042-S along with your US income tax return. In this scenario, your US tax liability is generally based on the income generated from your US trade or business as opposed to the gross amount of your sales. You will need to consult a tax advisor to verify if you are considered to be conducting a US trade or business. You may also consult this IRS publication for additional information.
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 Creative Market 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.
Q. Another site I sell on does not add sales of fonts and add-ons into taxes so why does Creative Market?
A. Based on advice of legal counsel, Creative Market is required to treat sales of digital content as giving rise to royalty income for US purposes. We cannot comment on the business practices of other companies.
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.