Recently, all content creators for the most popular video hosting received a letter by email notifying them of the new terms of earnings. So, starting from June of this year, Google will begin to levy income tax on the income of YouTube bloggers who live outside the United States.
For video bloggers, changes are coming - Google has planned to begin withholding taxes on their income from June 2021.
Their new, tougher, position on tax collections in the corporation is explained by changes in US tax legislation, according to which the company is obliged to take taxes on the income of channel authors from American viewers.
Thus, Google puts hosting content creators from around the world in a stalemate: Either file tax returns and pay less, or don't file and “taste” the consequences.
How will it work?
The tax will be levied on the income bloggers receive from viewing their content in the United States. We are talking about profit using all available monetization methods - viewing ads, sponsorship, the so-called "super chats", YouTube Premium service, etc. The tax rate can range from 0 to 30%, depending on the type of YouTube account and the blogger's country of origin (we'll talk about this a little later).
There are two types of accounts available in AdSense: individual and corporate. You can find out your account type in your billing profile. To do this, follow these steps:
- Sign in to your Adsense account.
- Click Payments.
- Click Manage Settings.
- Find your account type in the Billing Profile section under the Account Type heading.
When filing a declaration, you will need to take a survey, and Google will determine the type of your account. Once an AdSense account has been activated as an individual or a corporate account, you cannot change its type. In this case, you need to close the existing account and open a new one with the desired type.
For example, if an account is classified as a corporate account, the default retention rate will be 30% of US "viewer earnings." And if a blogger's account is classified as an individual, then reserve retention will apply to it - 24% of the total revenue from viewers around the world.
But this is if you follow the most stringent scenario. Youtubers themselves can adjust its rigidity. If bloggers give Google AdSense all the tax information about their earnings in a channel by May 31 ("to determine the correct amount of taxes to withhold"), the collection rate will drop significantly, and other, more promising scenarios will open up for the YouTuber.
To illustrate, let's take a blogger from Ukraine. Over the past month, he earned $ 1,000 in revenue from his video hosting channel. Of this amount, $ 100 "came" from viewers in the United States.
If our blogger does not submit tax information about the channel by the end of May, then he loses $ 240 / month. (24% tax of the total). But if he filled out the form on time, the monthly tax deduction for him would be only $ 30 (30% of income from US viewers). But, our blogger is from Ukraine! This means that he has the opportunity to save even more.
Ukraine and the United States have signed an agreement on double taxation (tax is paid only in one of the countries, in this case, the United States), according to which the tax rate is reduced to 10% of income from US viewers.
And the final payment is only $ 10!
Similar tax treaties in a number of countries can reduce the impact of the tax innovation or completely cancel it, as in the case of the UK, Russia and even Belarus.
The new policy does not apply to American YouTubers if they provide valid tax information.
Google can track the viewing of content by bloggers from different countries by IP addresses.
Will the changes affect Ukrainian YouTube bloggers?
Since there is a tax agreement between Ukraine and the United States, Ukrainian YouTubers can take advantage of benefits when submitting their tax information. So, in the end, the tax rate should be 10% and will be levied only on that part of the income that was generated in the United States. But is this a lot?
If we are talking about Ukrainian bloggers with a really large segment of the audience or viewers from the United States (for example, the Ukrainian-speaking diaspora), innovations can affect YouTube revenues. In all other cases, tax collection for the Ukrainian segment will go almost without a trace.
"These innovations will insignificantly affect the incomes of Ukrainian bloggers because income from US viewers will be taxed. And most of our YouTubers have few of them," Nazar Hrynyk, director of LEAD9 Mobile Marketing, says.
Moreover, according to the expert, the income from advertising on YouTube, even among popular bloggers, is not very high, and if you add here a meager percentage of the audience from the United States, the amount of recovery will turn out to be absolutely negligible.
But let us remind you: if the Ukrainian author does not provide all the necessary information by May 31, the "meager amount" can be transformed into a good blow to the wallet.
How to provide Google with tax information?
To avoid errors, the corporation's support page explains step by step how to proceed to fill out the tax information submission form.
For this you need:
- log into your Adsense account;
- select "Payments";
- click on "Manage settings";
- in the Payment Control section, click on the pen-shaped icon next to US Tax Information;
- then select "Manage tax information". On this page, users can find a guide to help them choose the appropriate form for each specific tax situation.
It is important to note that you need to update your tax data every 3 years, and you have to fill out the form itself only using Latin characters.
How do users evaluate the innovations themselves?
And although against the background of the introduction of taxes on the income of Internet platforms received domestically by a number of countries in the world, Google's actions look logical, and this can already be found, for example, on AppleMusic, users were puzzled by the changes.
YouTubers argue that since the company already receives a portion of the ad revenue it places on the platform, it is unfair to impose additional rates on the users of the holding.
Moreover, the possible tax rate that the American corporation plans to withhold significantly exceeds the personal income tax of a number of countries.
It is also believed that this change will significantly worsen the position of those channels that do not have millions of subscribers to attract sponsors for native advertising.
Will Google's decision provoke a churn of users of the video platform? There are indeed a lot of YouTube analogs, but the prospect of leaving seems more than vague. Indeed, according to the ratings of website traffic from various analytical companies, YouTube takes the leading positions from year to year – more than 8 billion visitors a month. There are no equal to hosting yet.
It is noteworthy that if other countries start talking about such earnings on income from "their viewers", Youtubers will have to pay even more.
The Corporation of Good does not react to such criticism, noting that innovations could not be avoided due to amendments to the tax legislation of the country.
"Under US tax law, Google is required to withhold taxes when non-US creators receive income from US viewers. We ask creators to provide relevant tax information to determine if any US withholding taxes apply, and where applicable, we will withhold US taxes from creator earnings starting later this year," Google responded to user criticism about planned tax deductions.
However, Google also mentioned in its official announcement that these retention rates may be adjusted in the next billing cycle, "as soon as valid US tax information is provided to AdSense."