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Permlink Replies: 7 - Pages: 1 - Last Post: Nov 30, 2017 1:52 PM Last Post By: vinayak
vinayak

Posts: 11
Registered: 07/05/17
Should we pay tax twice?
Posted: Nov 30, 2017 2:45 AM
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Hello there!

Simple question:

I have registered my German bank account to receive royalties.

However, as per Amazon policy, 15% of earnings are already deducted from US and then it get paid.

So, ideally, whatever is deposited to my account in Germany, I must declare as earning and pay tax here in this country as well?

Am I RIght?

Regards,
Vinayak
Alberto Garcia-...

Posts: 1,313
Registered: 05/02/13
Re: Should we pay tax twice?
Posted: Nov 30, 2017 4:30 AM   in response to: vinayak in response to: vinayak
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Vinayak,

Not at all... If you have requested the exemption for the double taxation, Amazon will deduct 0% (zero) from your earnings. I live in Germany, I can confirm that. Then, you have to declare your full income (from the 1042-S form) in your "Lohnsteuererklärung", and German taxes will be applied accordingly.

If you do not request the exemption, Amazon takes a full 30% (thirty per cent) off your royalties as taxes. Then, you have to declare again in Germany, and pay for the difference. That difference may be positive or negative, depending on your total income and conditions.

The end result may be very similar, but you may have to wait to receive your money back for a long time...

MfG

AlbertoG
vinayak

Posts: 11
Registered: 07/05/17
Re: Should we pay tax twice?
Posted: Nov 30, 2017 4:50 AM   in response to: Alberto Garcia-... in response to: Alberto Garcia-...
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Thank you, AlbertoG. This helped :)
Ralph E Vaughan

Posts: 3,425
Registered: 12/01/12
Re: Should we pay tax twice?
Posted: Nov 30, 2017 8:33 AM   in response to: vinayak in response to: vinayak
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vinayak wrote:
Hello there!

Simple question:

I have registered my German bank account to receive royalties.

However, as per Amazon policy, 15% of earnings are already deducted from US and then it get paid.

It's the policy of the IRS, actually. According to the IRS tax treaty chart, 15% is the correct withholding for German citizens receiving income from a U.S. company. You can apply for a refund of that withholding after receiving your 1099 in February (usually) but whether it's worth the effort will depend on how much was withheld.

So, ideally, whatever is deposited to my account in Germany, I must declare as earning and pay tax here in this country as well?
Do not rely on your own calculations or what was credited to your account. After you receive your 1099 (electronically is most efficient) your tax preparer will see both your earnings and withholding and be able to calculate your tax liability (if any) to your own country.

Am I RIght?

Regards,
Vinayak

Notjohn

Posts: 23,720
Registered: 02/27/13
Re: Should we pay tax twice?
Posted: Nov 30, 2017 9:57 AM   in response to: Alberto Garcia-... in response to: Alberto Garcia-...
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If you have requested the exemption for the double taxation

I have never heard of such an exemption, and Amazon has no authority to waive the provisions of the US tax code. If the tax-treaty with Germany provides for 15 percent withholding, then that's what will be withheld and remitted to the Internal Revenue Service.

I would have thought that there was a zero withholding treaty with Germany, in which case nothing is withheld.

@OP: did you enter your Germany tax identification number in the tax interview? That's what determines the withholding rate. And are you certain that the withheld amount is 15 percent, not 30 percent?

The US provides a tax credit or deduction for foreign taxes paid. However, the US is an outlier among civilized nations in that it taxes the earnings of its citizens and residents no matter where it is earned. (This is beginning to change, at least as it applies to corporations, but whether the changes actually take place seems very uncertain.) About three thousand Americans a year surrender their citizen because of this double jeopardy.

(Don't trust KDP to publish a print edition. Don't trust CreateSpace to publish an ebook. Each does one thing well and the other thing poorly.)

Good luck! -- NJ

Notjohn's Guide to E-Book & Print Formatting

The blog:
http://notjohnkdp.blogspot.com
Alberto Garcia-...

Posts: 1,313
Registered: 05/02/13
Re: Should we pay tax twice?
Posted: Nov 30, 2017 11:18 AM   in response to: Notjohn in response to: Notjohn
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Ralph, simply no, sorry. No 15%.
Notjohn, yes, there is a taxi treaty. I live in Germany and pay 0% tax in US since 2013.
AlbertoG
Ralph E Vaughan

Posts: 3,425
Registered: 12/01/12
Re: Should we pay tax twice?
Posted: Nov 30, 2017 11:47 AM   in response to: Alberto Garcia-... in response to: Alberto Garcia-...
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Alberto Garcia-Briz wrote:
Ralph, simply no, sorry. No 15%.
Notjohn, yes, there is a taxi treaty. I live in Germany and pay 0% tax in US since 2013.
AlbertoG

Be sure to contact the IRS and tell them their tax treaty chart is incorrect. Your input will probably be appreciated.
vinayak

Posts: 11
Registered: 07/05/17
Re: Should we pay tax twice?
Posted: Nov 30, 2017 1:52 PM   in response to: Notjohn in response to: Notjohn
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@Notjohn - I have provided my German tax number while filling tax information. I waited for 2 months and I am sure that tax holding is 15% in my case.
I think it is 0% for Alberto because he is a German citizen?

I am an Indian citizen but living and working in German, so maybe 15%.

Thank you all for the replies.

Regards,
Vinayak
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