Google’s tax changes may see YouTube creators outside the US lose up to 24% of earnings

Image Credit: Alexander Mils

Google will be required to deduct US taxes even for creators outside of the US this year. This could mean some large revenue losses for international creators.

Google have announced that, starting as early as June 2021, they will be required to deduct US taxes for creators outside of the territory. This could mean that creators on YouTube lose as much as 24% of their worldwide earnings which could be deducted for tax in the US.

The newly taxed revenue comes from ad views on videos, YouTube Premium, Channel Memberships, as well as their new social features Super Chat and Super Stickers.

Google are being held responsible for collecting tax information from all creators monetising content outside of the US. For instances where they don’t have any tax information, Google will withhold taxes “in certain instances when they earn income from viewers in the US”.

As such, Google are asking all creators to submit their relevant tax information through AdSense before May 31st, this year. The tool will ask a series of questions to help determine your unique tax position as a creator. For creators in the US, the changes to YouTube’s Terms of Service were made last year. US creators can check their AdSense info here.

A sample calculation to help you understand this concept

Example: A Creator in India earns $1,000 in revenue from YouTube in the last month. Of the $1000 in total revenue, their channel generated $100 from U.S. viewers. Here are some possible withholding scenarios: 

  • Creator doesn’t submit tax info: Final deduction is $240 because the withholding tax rate if you don’t submit a form is up to 24% of total earnings. This means that until we have your completed tax info, we’ll need to deduct up to 24% of your total earnings worldwide – not just your U.S. earnings. 
  • Creator submits tax info and claims a treaty benefit: Final tax deduction is $15. This is because India and the U.S. have a tax treaty relationship that reduces the tax rate to 15% of earnings from viewers in the U.S. 
  • Creator submits tax info, but is not eligible for a tax treaty: Final tax deduction is $30. This is because the tax rate without a tax treaty is 30% of earnings from viewers in the U.S. 
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