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Foreign entity and IRS

 
Tolovaj
Posts: 156
Message
on 02/25/2013

Hi, I wonder if anybody here can help me understand how a foreign entity (especially company) should communicate with IRS in case if this entity gets any money from USA based company.

As I believe there are many options, but basically foreigner (individual or company) needs EIN (Employer Identification number) in case for withholding taxes.

So here it is:

1. Individual with EIN (every freelancer can qualify)

2. Individual without EIN

3. Company with EIN

4. Company without EIN

In all cases foreigner from a country with a treaty to avoid double taxation.

Who (1., 2., 3., 4.) should file any kind of papers to IRS? Cases 3 and 4 are particularly  interesting to me.

Anybody? Thanks!


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chefkeem
Admin
Posts: 3394
Message
on 02/25/2013

You should probably be more specific with your question, but in general I'd say:

If you're a citizen from another country,

and you reside in your homeland,

and you receive income from an US-company ...

you'll have to pay taxes in your homeland.

The IRS is not interested in you.

 


Achim "Chef Keem" Thiemermann is the co-founder of a pretty cool new platform called...um...er...oh, yeah - Wizzley.com.
Tolovaj
Posts: 156
Message
on 02/25/2013

Thanks, I am afraid my case is more complicated because I am not individual. Tolovaj is company. Small, but still a company.

This is the link many might find interesting:

http://www.irs.gov/Individuals/International-Taxpayers/NRA-Withholding

In general most foreign individuals and companies are taxable by 30 % if they don't provide EIN (Employer Identification Number), e.g. to Amazon oz Zazzle. Maybe in this case IRS is really not interested in foreigners anymore. They already got the money.

If foreigner earning in USA come from a country with a treaty to avoid double taxation, he can get this 30 % back and pay taxes only in his home country. (But he must have EIN and file some papers.)

Or he doesn't get 30 % back and pay less (hopefully) taxes in his home country.

Or he doesn't get anything back and pay another tax in his home country...

So things can become complicated and expensive.

I believe several non-USA users here have affiliate related income from Amazon and/or Zazzle. I am sure at least some of them have EIN to avoid double taxation. I am particularly interested how should I communicate with IRS to do the same - to avoid double taxation. As far as I found out, the procedure should be pretty much the same for individual (freelancer) and company...

Thanks again.

 


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chefkeem
Admin
Posts: 3394
Message
on 02/25/2013

As an individual, residing in the US, I get money from Amazon-Germany (from my articles on pagewizz.com), which I add to my taxable income here. That's it. The German government does not want any taxes from me.

I'm not an expert, though. You better talk to a CPA about that.


Achim "Chef Keem" Thiemermann is the co-founder of a pretty cool new platform called...um...er...oh, yeah - Wizzley.com.
Sam
Posts: 723
Message
on 02/25/2013

 

chefkeem: 02/25/2013 - 09:22 AM

You should probably be more specific with your question, but in general I'd say:

If you're a citizen from another country,

and you reside in your homeland,

and you receive income from an US-company ...

you'll have to pay taxes in your homeland.

The IRS is not interested in you.

 

Unfortunately you are wrong Chef, Zazzle is, on behalf of the IRS, keeping part of my income and so does Createspace. At least until I get an US tax number, which you apparently can. Lis, also an author here, wrote about it in a G+ community we are both members of, hope it is useful to some here: https://plus.google.com/u/0/110271221575072796133/posts/HTwVupctVyL


chefkeem
Admin
Posts: 3394
Message
on 02/25/2013

I knew it. Me and my big mouth.  Cry


Achim "Chef Keem" Thiemermann is the co-founder of a pretty cool new platform called...um...er...oh, yeah - Wizzley.com.
Tolovaj
Posts: 156
Message
on 02/26/2013

Thanks Sam, this is exactly what I was told. The link you provided is very helpful and it fits with other published experiences on the web. It is even more precious because of the date - it is after May 2012 when the situation about EIN changed. Apparently it can still be obtained.

Now - if I understand the procedure correctly - certain paper should be filed to IRS for every tax year. EIN is only the beginning of the story. You can have your 30 percent back, but you have to deal with IRS.

I guess I'll try to contact Lis...

Thank you very much!


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