GETTING AN EIN – an Employers Identification Number
This advice is ONLY for authors who are publishing or earning royalties as a UK Limited Company.
If you are an individual for tax purposes, you need the advice HERE.
If you’re a British author, being paid by an American publisher, the fact that you may get 30% more royalties if you read this will just have to be compensation for the dull subject!
American publishers have to pay American taxes to the IRS (Internal Revenue Service). If you’re receiving royalties from an American firm, then the IRS are legally obliged to take 30% of your royalties in tax. You get what remains. However – and luckily – the USA and the UK have signed a tax treaty which means UK residents should only get taxed by the UK. You can receive your royalties untouched by US tax!
Good news! But it doesn’t happen automatically. It’s up to you, the writer, to prove to the IRS that you qualify under this treaty, and don’t have to pay US tax. And for that, you need to establish yourself as a UK taxpayer.
This is done by obtaining a US tax number called an EIN – Employers* Identification Number – and complete a W8-BEN form.
This tells the IRS that you qualify for US tax exemption.
*NOTE: you do not have to have Employees to get an EIN. You can be a single Director/owner of your company. It’s just the US terminology used.
Nowadays if the only contact you have with the US Internal Revenue Service is to seek this tax exemption on royalties, all you need is to complete the W8-BEN form using your EIN, and send that to your publisher(s).
NOTE: you cannot use your ITIN or NI number on the W8-BEN as a limited company – and vice versa.
Download and complete form SS-4 here or from the IRS website, with the notes on page 2.
These confirm which questions you can miss off since you are only applying to get this number for tax withholding purposes.
There are also detailed “Instructions for Form SS-4” here or from the IRS website so that you know what to put in the fields that you do need to complete.
- At question 9a you are “Other” not “Corporation”. Although you’re a corporation in the UK, “Corporation” on the SS4 means a USA Corporation. If they register you as a US Corporation, you’ll be expected to make a US tax return as well, which is not applicable.
- If asked, emphasise that you are asking for an EIN ONLY for the purposes of tax exemption on royalty income, NOT to be registered as a US-taxable entity.
The IRS website says that you can submit the SS4 online but this is ONLY for US corporations. UK companies must apply by phone.
Call the IRS’s dedicated line for businesses located outside of the US: 001-267-941-1099 (not toll free – but I consider it a reasonable cost to set up your company, and it can be claimed as a business expense). Keep your SS-4 form beside you when they do as they will ask you about your entries. Keep your company information close as well, as they may ask about the incorporation date / directors etc.
Make it clear you are the owner of the business. They will then be able to complete the application there and then.
You may be asked to quote your date of birth and other details.
They then give you the number over the phone and will send you confirmation by post in the next 2-3 weeks.
You can use the number immediately, so make a careful note of it.