Withholding tax is tax a payer deducts from a payment and remits directly to the tax authority. For certain US-source payments to foreign persons, the default statutory rate is 30%, which can be reduced where a tax treaty applies and a valid certification is on file.
Why does Withholding tax matter for founders?
This is the mechanism behind the common complaint that a platform deducted roughly 30% of royalties. It is often reducible with a correctly completed W-8BEN or W-8BEN-E claiming the applicable treaty rate, so it is worth fixing before the next payout rather than after.
Where can I read more about Withholding tax?
Note: A plain-English definition for orientation, not legal or tax advice. Rules change - last checked 2026-07-21.