A friend of mine who sells some artwork trough a US web site (Shutterstock) got an email that they will withold 30% of his “income” because of new tax regulations. Now he is a foreign guy who are in Europe and never even visited the US. I understand that only US citizens and residents are taxable. Am I right? The email he get contain the next few lines (among others):
“US tax law imposes a 30% withholding tax on US source passive income, such as royalties, that are paid to persons who are not citizens or residents of the United States. US tax law requires the person paying the royalties to withhold the tax and pay it to the US Internal Revenue Service. If the person receiving the royalties is a resident of a country that has an income tax treaty with the United States, the withholding tax may be reduced or eliminated. However, to take advantage of the lower withholding tax US tax law requires that the person receiving the royalty payments provide a properly completed Form W-8BEN. US tax law also requires that the person who provides a Form W-8BEN for this purpose have an ITIN.”
Does anybody has any comment?