updated 7:00 PM CEST, Jul 2, 2022

Expat YouTube 'creators' stunned by YouTube tax announcement

YouTube, the giant, San Bruno, California-based online video-sharing platform, has stunned video content "creators" around the world with its announcement this week that it will soon begin to deduct taxes from their YouTube earnings for the first time, because its parent, Google LLC, says it must.

Speaker 1 BESTAccording to YouTube, the first thing YouTube contributors need to do is begin providing the company with their tax details. YouTube says the new obligation to collect this information and begin to withhold taxes is so that Google can comply with U.S. tax rules, and it apparently applies to all YouTube contributors, not just Americans.

In an email to these contributors, YouTube said that if they don't provide the necessary tax information by the end of May, "Google may be required to deduct up to 24% of your total earnings worldwide."

As a video-sharing platform might be expected to do, it gives a more extensive explanation in a five-minute YouTube video (pictured above), narrated by an unidentified spokesman (pictured left). 

Reaction 

YouTube creators were quick to react to the news of the new YouTube tax policy – which they did via social media, of course. Among them  was Evan Edinger, the American expat blogger based in London, who, as reported, is originally from New Jersey, and began his YouTube career after coming to the UK in 2012 to pursue a master's degree in actuarial science. Evan Edinger

"Not content with just taxing US-born residents of 'foreign countries' the IRS is now going to be taxing YouTube creators with no connection to the US at all with up to 24% of their worldwide income if they have American viewers," Edinger, whose YouTube episodes often touch on American expat financial and tax issues, tweeted (pictured right).

David Treitel, founder and managing director of London-based American Tax Returns Ltd., admitted to being surprised by YouTube's newly-announced tax reporting stance, as it doesn't appear to be based on new regulations.

"Most likely Google is responding to growing pressure from the U.S. government to maximize its U.S. tax take," he said.

Peter Palsen, an international tax law specialist with Frost & Associates, based in Annapolis, Maryland, said YouTube's action was "consistent with the type of efforts that Amazon, Apple and Coinbase have been making" recently, with respect to payments to foreign persons.

"These companies have an obligation to continually review the characterization of their payments and withhold the proper amount of tax", while taking into account the relevant tax treaties.

Palsen added: "There might be some suspicion about whether this effort was a way for YouTube to pass on its increasing burden of global advertising taxes, but that is not the case here."

Palsen also noted that the 24% tax referred to above was just "a back-up withholding, applicable to people who don't provide YouTube with necessary information to allow them to comply.

"If you provide YouTube with the required information – and they make it clear on their site what is required – you shouldn't face this backup withholding burden."

What's more, he added, "U.S. citizen expats can file a Form W-9, and thus avoid having to be subject to the withholding tax on payments made directly to them."

However, if the expat is using a foreign corporation to provide content, then withholding tax can be applicable to payments to the corporation, depending on how the corporation is treated for U.S. tax purposes, he said.

IRS Form W-9, formally known as the “Request for Taxpayer Identification Number and Certification,” is provided to a third party – in this case, YouTube – which in turn deals directly with the IRS. The form is never forwarded to the IRS, but retained by the third party, which uses it to fill out and file, along with the payment information, a Form 1099.

To read a transcript of the YouTube video detailing the new tax filing requirements affecting YouTube content creators, see page 2, below. (Click "next"...) 


  Below, a transcript of the new YouTube video detailing the new tax filing requirements affecting YouTube content creators: ("Update for Creators OUTSIDE the U.S."). 

In this video, we'll walk you through important tax changes that may soon impact monetizing [YouTube] creators outside of the United States.

We know that tax information can be overwhelming.

So we're going to walk you through everything you need to know about what's changing, and the steps you need to take.

And be sure to check out the links in the description, for even more detail.

Let's dive in. First, what's happening. If you're a [YouTube content] creator [living and resident] outside of the U.S., you may begin to have taxes deducted from your U.S. earnings later this year.

Google, [the parent company of YouTube,] has a responsibility, under Chapter 3 of the U.S. Internal Revenue Code, to collect tax information from all 'monetizing Slide 1[YouTube] creators’ outside of the U.S., and in certain instances, to deduct taxes when these creators earn income from viewers in the U.S.

These U.S. earnings can come from ad views; YouTube Premium; Super Chat, Super Stickers and channel memberships.

So what does this mean for you? Over the next few weeks, you'll be asked to submit your tax information in AdSense.

Here's how you find it. In AdSense, go to ‘Payments’, and then ‘Manage Settings’.

You'll see an option to manage your U.S. tax information there.

You'll be asked a series of questions to determine the appropriate tax form.

This online tax form will be available in your selected AdSense language.

Generally, for creators outside of the U.S., this will be either Form W-8BEN, which is typically for individuals – or Form W-8 BEN-E, which is typically for businesses.

If you're unsure about which forms you need to fill out, you should consult a tax adviser.

Note: Even if you're paid by an MCN [‘Multi-Channel Network’, or third-party service provider], you will still need to submit your tax info in the AdSense account that's linked to your channel.

How much you'll be taxed

How much will you be taxed? How much you'll be taxed depends on a few things.

It depends on if your valid tax form has been submitted, or not; how much your channel earns from U.S. viewers; and, if your country has a tax treaty with the U.S., that you've claimed the benefits for…

Let's dive into each of these factors.

First, is your tax forms submitted? Once you submit a valid tax form, you can find your tax withholding rate in the payment section of AdSense.

Tax withholding rates are between zero to 30%, depending on your country, and are applied to your monthly U.S. earnings from AdSense.

If you want to calculate your U.S. earnings, go to YouTube Analytics, and then [to] ‘Advanced Mode’. Then select the date range you want to look at.

Since you're paid monthly, we suggest setting the date range to look at the month you want to calculate.

Then click ‘Geography’. From here, add a secondary metric, and choose your ‘Estimated Revenue’.

From there, find the U.S. in the list of countries below the graph, to see your estimated U.S. revenue.

For example, if your withholding rate is 30%, and you make US$200 from the U.S. every month, US$60 would be withheld monthly.Slide 4

Now: What happens if your tax form is not submitted?

If Google does not have tax forms from you, by the time these changes go into effect, Google will be required by law to presume you're a U.S. person, if you have an individual AdSense account.

This means until we have your completed tax info, we may need to withhold up to 24% of your total earnings worldwide, not just your U.S. earnings.

So the earlier you can get your forms in, the better.

And finally, does your country have a tax treaty with the U.S.?

Some countries have a tax treaty with the U.S., that can potentially reduce the tax withholding rate on your revenue.

So if you submit your tax info and claim a treaty benefit, your tax rate might be reduced.

For example, partners in the UK or Canada may be eligible for a tax rate of 0%, while partners in Mexico or Korea may be eligible for a tax rate of 10%.

AdSense will automatically surface the opportunity to claim a treaty benefit, If one exists between your country and the U.S.

To claim a tax treaty benefit, you'll need to provide a non-U.S. tax identification number in the Tax Identity section of the Tax Tool, in AdSense.

This is issued by your local tax authority or government.

Or, in some cases, you can provide a U.S. Tax Identification Number, like an Employer Identification Number, (EIN)? Or an Individual Tax Identification Number (ITIN).

To see a list of countries that currently have a U.S. tax treaty, check out the link in the description to the IRS website.

For more detailed information on this tax requirement, please check out our Help Center, and the links in the description below.

Thanks for watching.