Hi guys - just a quick question. I have submitted one of my books to Smashwords today and have been going through the payment information to complete the sections. I understand that payment to UK authors is made via Paypal. However, when I go into the payments page to enter my Paypal details it also requests that a form W8 be submitted to avoid paying tax in the US as well as the UK. I just wondered whether you guys have had to complete this (as we never had to do this with Amazon) and how lengthy a process it is (from what I am reading you first have to obtain an ITIN code and then submit a W8 form, which all sounds very long winded - I just want to make sure I'm not reading it wrong!) From what I read, I have to get an ITIN number using a W7 form, which entails completing, signing, and posting the form off to the United States along with copies of ID such as passport, which first has to be certified by the passport office or American Embassy. Once this is done, which takes a couple of weeks from what I read, I then have to complete a W8 form. Is this something that all UK authors on Smashwords have had to do or am I just reading it wrong...(this is entirely possible, as I love reading everything apart from instructions...)
You can do it with Amazon - I did. There is a link somewhere to download the form, which when complete you have to post to them in the US.
Not used smashwords yet, but I have done it with Lulu.
1. Download and complete the form to apply for itin.
2. Send with letter from smashwords (I think they only give this when you have £10 sales), passport etc to the IRS. They have an office at the American Embassy in London where I took mine - dont worry about the visa queues the IRS is separate and I just walked in (be prepared not even to wear a belt on trousers though as you pass through the security). I was in and out fast. They check it and send it off to America. You can do it by post. And they respond to emails but not instantly. The IRS are however very good and helpful.
3. When you get your ITIN, compete Amazon/smashwords form and post it to Amazon/smashwords.
The same ITIN is used for every publishing outfit you use.
Should say I did this over 2 years ago and things may have changed
This is not advice, you should check it and treat it with caution, only what I remember, perhaps incorrectly, from my time as a tax specialist 15 years ago. Things may have changed.
As a Brit in the UK:
1. You dont bother. You pay US WT at 30%. The UK taxman will be looking to tax you at your marginal rate, which if below 30% means you have effectively lost a bit of this money. (eg if your UK tax rate is 20%, you would loose 10% (which would be 1/3 of the tax) as I dont think you can set off overseas tax paid that is more than your uk liability).
2. You do it. You will receive 100% of your income and only pay the UK tax. Which may mean you have more money in your pocket. If your UK tax rate is above 30% I dont think that it would make much of a difference.
3. If your income in total is under your personal allowance then it may be worth doing it as you would be able to keep 100% of your income, as opposed to giving the IRS 30% of it.
Great stuff, thanks for the response. People obviously are doing it then - I have spoken to a few people about Smashwords in the past and nobody ever mentioned all this form filling so I was a bit nervous that I had misunderstood. Thanks for clarifying! Better start prining off forms then!