What is an EIN number and why do you need it for Easy License deals:
An EIN number is an employer identification number and is used in the U.S. to identify an individual or a Company. The Internal Revenue Service (IRS) in the United States issues a unique EIN number to each individual or entity that applies. An EIN number is very similar to an ITIN (individual tax identification number) but does not require the submission of personal information, including birth information, your passport, and proof of identity for issuance. In addition, FGL can obtain your EIN number on your behalf in a short amount of time, whereas you must obtain an ITIN yourself, which could take months.
FGL, as a U.S. based Company, is required to report all payments made to individuals or entities located outside the U.S. whether or not a tax treaty applies to the payment. As such, each individual or entity we send payment to, must have an EIN number with the IRS, so that we may properly report these payments.
Tax withholding on Easy License deals:
Many countries around the world have a tax treaty with the U.S. Each tax treaty specifies the amount of tax withholding required when selling a license, which is considered a copyright royalty. Depending on your country of residence, as specified in the required paperwork for Easy License deals, FGL will withhold anywhere from 0-30% in taxes and remit to the IRS on your behalf. If no tax treaty exists between your country and the U.S., we are required to withhold 30% in taxes from your license payment. A list of tax treaties and associated tax withholding rates can be found in IRS Publication 901 on the IRS website at http://www.irs.com .
What you need to know about year-end tax reporting on Easy License deals:
At the end of each year, FGL will send you tax form which lists all payments we have made during the year, and all tax withholding on those payments which were remitted to the IRS on your behalf. This form is called a 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. We are required to postmark this form by March 15th each year, for the period of January through December of the previous year. This form will be mailed to the address you provided in your initial tax paperwork completed, therefore it is important to keep us informed of any address changes.
Once you receive this form, you should take it to your tax preparer, who will decide, based on your individual circumstances, whether you qualify to apply for a refund of the tax withheld from the IRS. Unfortunately, FGL is unable to dispense tax advice, and must insist you consult a tax professional in your country for how to report the income received from your licensing deals.