If you write and sell eBooks on Kindle and CreateSpace, and you are not a residence of the US, any sells made in the US have 30% tax deducted at source. On top of that you will have to pay tax to your country of residence as you would for any untaxed income.
However there is an agreement between the US and other countries that enables you to have 0% deductions. You still have to declare the earnings to your own tax office but you do save that 30% which can be quite significant.
To have 0% deducted is now fairly straight forward. The process has improved quite considerably and you should be able to sort it out in half an hour and not have to phone the US tax office to get a tax number reference as you had to previously.
Log into your KDP Kindle account where you books are listed, click on the Account link. You may have to log in again at this point. The page that is displayed shows account and tax information. Click on the View/Provide Tax Information button. Now click on the Tax Interview button which will then take you to a series of questions.
Go through the questions. I choose ‘individual’ as the type of organization which is probably what most people will do. The important question is your tax reference – select that you are not a US resident and then enter in your NI (National Insurance number) or UTR (Unique Tax Reference), or the equivalent tax reference that is used in your country, then go through the rest of the questions.
A form will display (W8-Form) at the end which should show your tax deduction is 0%. If you don’t see 0%, you must have selected something wrong, so cancel out and start again.
Take a screen shot of the form for record purposes.
You now have to sign the form electronically.
You do need to keep a record of sales as you may have to pass that value on to your tax office. Amazon will send either a physical tax report or an email to you which you should retain if the tax office wants proof.
HMRC is the UK tax office and I have found them to be quite helpful if you are just declaring a small amount of un-taxed income (less than £2,500) when you are in full employment. You don’t have to do a full tax return and they will just modify your tax code over the phone. Obviously if there is much more untaxed income such as capital gains or company payments or you are self-employed then you will have to do a tax return, but many people are just writing a book to earn a small amount of cash while they are in full employment.