When choosing Taiwan (or HongKong) as Corporation residency, the withholding tax will be automatically 30%, hence Amazon will keep this 30% of the revenue. A message is showing up that there is no Tax Treaty between the US and Taiwan. I’m non US-citizen.
No Tax treaty notification:
I’m wondering, is there a way to claim the withholding tax back from the IRS? Does anyone has experience?
Alternatively, I’m looking at E-residency in Estonia, but it would be a major advantage to set up a corporate structure here in Taiwan since here’s my main hub for living.
Any suggestion are very much appreciated. Thank you and have a nice weekend!
What happens if you select US? I have a consulting company in Taipei and file Taiwan and US taxes every May (with an extension in the US) and deduct my company and personal tax statement. I use the Foreign Earned Income Exclusion. Basically, I settle the tax bill when I file taxes.
If you select Taiwan, and Amazon then collects the 30% upfront, you would most likely receive a refund from the US govt when you file with them.
No, I’ve not tried the US yet, because I’m not a US citizen, nor having the residency there. I also do not have a registered entity in the States. However, my main sales is from the US.
I was hoping whether there’s a way to file with them in this case? Is there a way I can double check with the IRS whether it’s eligible to my situation to file for the refund before hand to setting up the corporation?
Sounds like you may have to request a Taxpayer Identification Number (TIN) or Employer Identification number (EIN) from the United States’ IRS if you are selling stuff in the USA and want to claim a tax refund.
First, if you are a Taiwan corporation and payments are being made to this corporation, then a W-7 won’t help as it is for individuals. If you are still operating as an individual, then yes this for is what you want. Do you pay any taxes in your home country? If so, you can choose not to use Taiwan. Hopefully your home country does have a treaty with US and you can avoid the 30% withholding. You will need to provide the W8 form to Amazon once you have your ITIN. Here is the form https://www.irs.gov/pub/irs-pdf/fw8ben.pdf
The withholding rates and treaty citations are in this doc https://www.irs.gov/PUP/individuals/international/Tax_Treaty_Table_1.pdf For example, if you are a citizen of Estonia and your publications are paid as royalties, then your withholding rate is 10% and your treaty citation is 12(2) for purposes of the W-7.
Now, If you ONLY file a Taiwan tax return, then we are back to the beginning and you must fill out the W7 choosing box ‘b’ not ‘a’ and getting your withholding back after you file a 1040NR tax return.
Of course this will all change if you incorporate. You should choose ahead of time whether the payments from Amazon will be assigned to you personally or to a foreign corporation. If you incorporate in Estonia (Is this where you are a citizen?) and file tax there (no sales in Taiwan and no work in Taiwan, so no need to report income there) then you can definitely qualify for the treaty exemption. The trouble is, unless you are paying a professional to do all of these international filings for you, it will be cumbersome to meet both corporate and individual compliance requirements for both countries. Its hard on the little guys. As an aside, book royalties in the US are treated as earned income, not passive. I’m not sure about Taiwan or Estonia, but that should be part of the process of you choosing an entity.
You should definitely tell us what books you have published!
Thank you very much, Bree, for this profound explanation, I really had to read it multiple times as these issues are very difficult for me to understand.
To your questions, I currently do not have a residency of any country as I signed off my residence and business in Germany last year. Hence, I’m not eligible to pay taxes anywhere as soon as I don’t qualify as tax resident in certain countries.
Currently, I applied to become an Estonian E-resident in order to incorporate in Estonia instead. I’m more than happy to pay taxes, in general, the tax payments won’t bother me at all. The only concern that matters to me is to get into the Taiwanese system and contribute directly here to the community as I’m mostly based here.
For me, in summary, it seems to be the only solution so far, hence I will not be related to Taiwan in any form which is sad, but the only way right now.
Thank you very much, though, I really appreciate that you took your time to answer in all the details.
