Disclaimer: The following information is not legal or tax advice. Consult with your tax advisor for personalized guidance.

While we cannot provide you with tax advice, we have put together this article to help you through the process of filling in a W-8 form. This has the caveat that you should always seek advice from a professional accountant/tax advisor because we are not authorised to advise about your specific tax situation, including filling out your specific tax form.

What’s required?

Non-US merchants and affiliates are required to complete a standard IRS form called Form W-8BEN (for individuals) or Form W-8BEN-E (for organizations) which includes some basic information about you, including your Foreign Tax Identification Number (TIN) and country of residence.

The purpose of the Form W-8BEN and Form W-8BEN-E is to establish your identity and status as a non-U.S. person. If you do not submit your tax information, your earnings from US buyers will be taxed at the highest rate of 30%, and will not benefit from a reduced withholding tax rate under a double tax agreement (if applicable).

Each store in Lemon Squeezy has one owner, and it is their details which should be in the tax information. That owner can be a corporation or other type of entity, but not a partnership. Partners must nominate one partner to submit their tax information. Withdrawals will only be made to the nominated partner.

Royal withholding tax

Generally, transactions in digital creative content give rise to royalty earnings. If you are a non-US merchant, your sales to US buyers may be subject to royalty withholding tax, depending on your country’s income tax treaty with the US.

US tax law provides that the US government may collect taxes for US source royalty income. A royalty is considered to be US sourced when the sale is made to a person residing within the US.

Accordingly, if you are a non-U.S. person, your sales to US buyers may be subject to royalty withholding tax of up to 30%.

However, if you are a resident of a country that has an income tax treaty with the U.S., you may be eligible for a reduced withholding tax rate. The full text of these treaties can be found on the IRS website.

A list of the applicable treaty royalty withholding tax rates can be found here. The applicable rates applied are based on the copyright classification.

Any tax withheld by Lemon Squeezy will be remitted to the IRS. We will also be preparing and filing form 1042s for the year ended 31 December with the IRS that will show the amount of your gross earnings from US buyers and taxes we paid from these earnings. You will be provided a copy of your Form 1042 from 15th March in the year following the year you made your earnings. These forms can be provided to your tax accountant to assist with claiming any tax credits that may be available in your home country.

How to complete a W-8 form

To help you provide this information quickly and easily, we have provided a form on the Store Payout Settings page for merchants and the Affiliate Payout Settings page for affiliates.

To see the W-8BEN form, select "I am not a US Person" then select registered as an "Individual". To see the W-8BEN-E form, select "I am not a US Person" then select registered as a "Company".

W-8BEN form for individuals

The form asks you for your personal details. Please provide details including your name, country, postal address, and date of birth. Please ensure that you provide a complete address because this address may be used to send you a hard copy of your Form 1042, which is your US earnings summary for the year.

It also asks for your tax identification type and number. You may provide your Foreign Tax ID Number, which is the number that you use when you submit your tax return or pay taxes in your country.

If you’re unable to provide your tax identification number you won’t be able to claim a tax treaty benefit and your earnings from US customers will be subject to 30% withholding rate.

To find your Foreign Tax ID Number, please see the guidance provided by the various jurisdictions and the OECD here. Alternatively, you may also find the guidance provided by the European Commission.

W-8BEN-E form for organizations

The form asks for your organisation’s details. Please provide your details including your name, your organisation’s name, country of incorporation, and address of your country of residence.

You’ll also need to specify your chapter 3 status. Chapter 3 status refers to, chapter 3 of the US Internal Revenue Code (Withholding of Tax on Nonresident Aliens and Foreign Corporations). Please refer to the IRS instructions for further details. Please select the type that represents your classification (e.g. corporation, trust, estate, etc). By selecting a particular type, you are representing that you qualify for the classification indicated.

It also asks for your tax identification type and number. You may provide your Foreign Tax ID Number, which is the number that you use when you submit your tax return or pay taxes in your country.

If you’re unable to provide your tax identification number you won’t be able to claim a tax treaty benefit and your earnings from US customers will be subject to 30% withholding rate.

To find your Foreign Tax ID Number, please see the guidance provided by the various jurisdictions and the OECD here. Alternatively, you may also find the guidance provided by the European Commission.

How to submit a W-8 form

Once you have verified that all the information you have provided is correct, you can submit your information by clicking the “Submit tax details” button at the bottom of the form. You will be shown a modal with a summary of the information you have provided. Please review this information carefully to ensure that it is correct. At this stage you will also have the option to fill in any further optional fields in the form.

Please make sure you understand all the items under the "Certification" section. The purpose of the Form W-8 is to establish your identity and status as a non-U.S. person, that you are the beneficial owner of the revenue and whether a lower rate of withholding applies as the result of a treaty claim. Even if your country does not have a treaty with the US, the form is used to establish that you are not a U.S. person. It is important to note that providing false information is subject to penalties under perjury.

After providing your name as an electronic signature, you can click "Continue" in the top right of the modal. You will be prompted to click "I Agree" to be legally bound by the document. The W-8 form has now been successfully submitted.

If you have any questions about this process, don’t hesitate to contact us.