Foreign Copyrights and Royalties

Payments made to foreign individuals and entities for copyrights and royalties are subject to federal tax reporting and a 30% federal income tax withholding unless certain exceptions apply.  In general, this includes payments of any kind made as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films and films or tapes for radio or television broadcasting, any patent, trade mark, design or model, plan, or secret formula or process, or for information concerning industrial, commercial or scientific experience.

A foreign individual or entity, if eligible, may claim treaty benefits to avoid or reduce the 30% federal income tax withholding.

Foreign Individual – Complete IRS https://www.irs.gov/pub/irs-pdf/fw8ben.pdf - Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals).  All sections must be completed, including Part II, Claim of Treaty Benefits.   A U.S. Social Security Number or Individual Taxpayer Identification Number is required for eligibility.

Foreign Business Entity- Complete IRS https://www.irs.gov/pub/irs-pdf/fw8bene.pdf - Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities). All sections must be completed, including Part III, Claim of Treaty Benefits. A U.S. Employer Identification Number is required for eligibility.

Other exceptions to the 30% federal income tax withholding may apply including:

  • The payee's royalty/copyright income is effectively connected with a U.S. trade or business.  The payee must complete IRS https://www.irs.gov/pub/irs-pdf/fw8eci.pdf - Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States.  A U.S. social Security Number, Individual Taxpayer Identification Number or Employer Identification Number is required for eligibility.
  • The payee is foreign tax-exempt organization and has submitted IRS https://www.irs.gov/pub/irs-pdf/fw8exp.pdf -Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding. A U.S. Social Security Number, Individual Taxpayer Identification Number or Employer Identification Number is required for eligibility.

Payments for foreign copyrights and royalties should be charged to object code 567006 foreign copyrights.

Please contact Laurie Bouchard at lmbouchard@amherst.edu if you have any questions or need information on a specific country’s tax treaty with the U.S.