Forum Moderators: martinibuster
First, in order to be tax compliant, Google is required to
collect tax-related information from all AdSense publishers.
Therefore, in November of this year we’ll launch an easy-to-use
'wizard' to allow you to submit the necessary information. You'll
need to submit this information by November 30, 2003, in order to
avoid delay of any earnings payments. We’ll be unable to send
further payments to you until your tax information has been
submitted.
For U.S. publishers, this information will include Internal
Revenue Service form W-9, which will be available to submit in
electronic format from within your AdSense account.
If you are located outside of the U.S., or if you would like
further details about the collection of tax-related information,
please visit:
AdSense Tax Information Page
[google.com...]
Your tax information is being collected in compliance with U.S.
tax laws, and will be securely stored, encrypted, and used for
tax purposes only.
ALTERNATE ADS
Second, we've introduced an 'Alternate Ad' feature to your
account. This new feature allows you to monetize your ad space in
the event that Google is unable to serve targeted ads to your
page. From the 'Ad layout code' page, enter the URL of a static
image, clickable image, or ad server, and AdSense will load your
ad instead of Public Service Ads (PSAs). Should you choose not to
specify your own ads, PSAs will continue to be served to your
page.
For more information on the new 'Alternate Ads' feature and how
to take advantage of it, please refer to the AdSense FAQ at:
[google.com...] .
From the article :
The bad news is that the consensus says that if a business sells its products from a website on a server that it owns or rents in another country it could have a taxable presence in that country (see note to editor 2). Having a taxable presence means filling in a tax return and potentially receiving a tax bill.
[itweb.co.za...]
I am in the UK and I have been using advertising companies in the US for years. They tend to ask you to fill in a W-8BEN then they cough up the dosh.
I use hosts all over the place. If one country wants me to pay tax because I use a server in their country then they can sing for it. I will move the server, take me about 1 minutes to change the DNS.
All we need to worry about is getting the cash and what to do with it when it arrives. Whatever your tax position in your coutry is all that matters.
Just make hay while the sun shines, use the money to invest in all your ideas, put some to one side incase the tax man calls and keep building huge content based sites.
But if you only pay for a hosting service from an ISP, that is intangible, not physical equipment, so not a place of business (business presence).
Other articles found with "For a server to constitute a permanent establishment" cover this. For example:
UK Govt: "The UK takes the view that a web site of itself is not a permanent establishment, and that a server is insufficient of itself to constitute a permanent establishment of a business that is conducting e-commerce through a web site on the server."
New Zealand Govt: "a web site cannot, in itself, constitute a permanent establishment, nor does a web site hosting arrangement through an internet service provider result in a permanent establishment for a company carrying on business through the web site.
Businesses that own or lease their own servers will not necessarily have a permanent establishment where the server is located."
KPMG Canada: "For these purposes, an Internet Service Provider (ISP) that hosts a Web site of a non-resident person on its servers in Canada will not generally be considered an agent (and thus a permanent establishment) of the non-resident person. "
And so on. It'd be nice to find an authorative US statement on this, but there's no reason so far to consider they are not following the OECD standard.
[added]However as others have said it doesn't really matter what the legal position is, Google can demand anything they want with or without any legal basis for any or no reason, that's their right. Might be simpler and quicker just to move the sites out of the US.[/added]
I am in the UK and I have been using advertising companies in the US for years. They tend to ask you to fill in a W-8BEN then they cough up the dosh.
Sense_able,
Did you also have to get a US TIN (Tax Information Number)?
Sense_able,Did you also have to get a US TIN (Tax Information Number)?
No I have never has a TIN.......
At the beginning of November, we'll provide an easy-to-use interface that will direct you to the appropriate forms for your tax situation. This interface will be available upon logging in to your AdSense account, and most tax forms will be provided in electronic format for you to complete and submit online
Looks like they anticipated the questions - I'm thinking of some sort of online questionnaire that you just reply to the questions and are then directed to the best form.
My question: Is a foreign national that host his website on the US and gets paid from a US based advertiser liable for taxes in the US?
His answer: The type of taxes that the foreign national if any depends if income is considered to be effectively connected with a US trade or business. In his opinion the connection in this case is the payment from the US based company {Google}. Therefore, there is tax to be paid. He went on to say that this income will be taxed at a graduated rate just like regular US taxpayers or a lower rate if a treaty applies.
His reference: Publication 519 page 16.
My take on this: According to this agent, the link is the Google payment not where you have your server. Kind of archaic, but that is the Government for you. In addition, hosting or not hosting the site in a US server is not a factor.
I asked what you guys could do if you wanted to get a definite answer on your particular case, and he said call the 1-800 numbers (I got my answer after holding for five minutes while he researched) or contact them via email through their website (expect an answer within 4 days)
1-800-829-0922
1-800-829-1040
www.irs.gov
His reference: Publication 519 page 16.
It's important to note this publication only applies to individuals (who are not resident in the US), not to foreign companies.
US source income is, as stated there, only taxed if it is effectively connected with a US business. In other words, the business has to be "in" the US. To be "in" the US, either you (the person) or the business need to be there.
That's why the definition of whether web hosting is a "permanent establishment" is so relevant: if that is the only US presence, and it is not considered a permanent establishment, then you do not have a business in the US. The source of the payment is irrelevant.
How many people here, outside the US with web hosting there, need to and do declare and pay US tax on every single check they get from every advertiser/associate scheme that happens to be issued from the US? This was resolved by other companies long ago.
BTW, according to CNN: "What's worse, in a 2001 audit by the Treasury inspector general for tax administration, only about 53 percent of IRS agents' answers to telephone queries were appropriate. " - and that's for simple employee-type questions. (Of course, the same or much worse applies to postings here, including mine).
I've never heard of non-US affiliates having to pay US taxes if they did not have a physical presence there.
Why should Adsense be any different?
"CJ is now requiring all new publishers to fill out tax forms. CJ can not legally 'give advice' on filling out these forms. However, we can provide the relevant links to the US Government Internal Revenue Service's official web site. Canadians may want to take special note of line 7 of Page 4 of the w8 instructions...."
The relevant part for the fellow Canucks deals with a line on the W-8BEN that asks you to put your SIN, hopefully as an offset to a US TIN/SSN.
div01, I don't mean tax based on the nationality of the clickers / buyers, I mean tax based on (the nationality of) the company that pays you (for Google that would be the US).
"If you do not have a U.S. business presence, you will be asked to agree to a statement to that effect. No tax forms are required in this instance"
however according to this Mr. Hamilton this third option is not at all possible..rite? As i said in another thread, the only one who can clear up the confusion is G ; and they better do so quickly.
Just like you don't pay tax when you open up a US brokerage account and trade stock.
Google are saying that we are liable to US tax if we are hosted on a US server - it is NOT because we are receiving money from google - a US company.
In my opinion, this is crazy - I'm sure this must be wrong - but it is vital to get a definite answer to this question from the IRS - So far, we only have the opinion of this Mr Hamilton guy.
I am currently hosted on a Canadian server - so I'm Ok - or does that mean the Canadian government will want a piece of me!
I was planning to move server shortly - hosted in the US - now I don't know what to do!
The only thing that's right is what it says in the law (ie the written down version) - but unfortunately that's usually open to interpretation and also subject to change.
I guess the best thing would be to get a tax lawyer to answer any questions and get it in writing (but I guess tax lawyers aren't responsible for what they say either?).
So I think it is up to them to clarify this issue - especially as no other US income source (eg amazon or CJ)is doing this to its publishers.
They all ask us to fill out the W8 form - but nobody is asking us where our site is hosted!
One thing is certain - everyone needs to play by the same rules - so either Google is wrong, or everyone else is!
Google gives you three choices - U.S. Business, Non-U.S. Business, Non-U.S. Business (with US presence). What if you are an individual? My Google checks are made out to me, not a business or company. Does that affect anything?
hmmm...
SN
