Wednesday, February 02, 2011

Conf 660: Ebook UK Royalties: Amazon Kindle and Smashwords Sales


Still have hands majorly clamped to ears. The novel is selling a little bit in the UK, no sales on Amazon US yet. It's a delicate time, much moreso than publishing via an agent and publisher as you don't have that protective barrier of thinking hmph well, they must have liked it or they'd not have taken me on.

Ebooks really are still in their infancy here. 90% of my non-fiction sales on Amazon are in the US. Ebooks have now, apparently, overtaken paperback sales there.  So it's a bit of a priority to get my US tax forms sorted but it's so complicated. I've had my forms returned once already so have been updating the blog post I did last year.

I'll be going to the Embassy in the next week or so and will report back. Meantime here's the blog piece again:

Now that UK and overseas authors can sell their Kindle ebooks via as well as I've been checking up on royalty payments and the US tax situation.

Previously payments were made to all overseas authors via US$ cheques. This is still the case with ebooks sold on .com. You'll have to pay a UK bank charge for paying the cheque in. RBS, for example, charges £7.50 per transaction.  Amazon have recently changed their criteria on issuing royalty cheques and  now no payment is made until at least $100 is owed. On request (see Smashwords FAQ link below), Smashwords will withhold payments until your US tax number comes through.

Royalties due on ebooks sold on are paid in UK £ cheques and mailed monthly. You have to accrue at least £75 worth of royalties before a cheque is issued. Most ebook sales (at Feb 2011) are still made to the US who are 12 - 18 months ahead of Europe in adopting ebook reading.

If you haven't registered for exemption, Amazon will withhold 30% of all sales made on .com for US tax.

Update Jan 8 2012: A comment on this blog today by JTR below tells how she applied, and was given over the phone, an EIN number. EIN stands for Employer Identification Number. "I told them I was a UK based author and they said the EIN was fine, I was effectively the sole proprietor of my own business - I didn't need to go to the US embassy.." This is an excellent development which makes it all so, so much simpler. I'll keep the ITIN guidelines up but this is the way to go. Smashwords and Amazon accept EIN numbers. 

To get an ITIN number is much more complicated. This is what's involved and, thank goodness, no longer necessary:  B B B...... SORRY ANOTHER UPDATE, things change and as at April 2013 please go to my next post to get links to important updates.

First apply for a US IRS Individual Taxpaper Identification Number (ITIN) by filling out form W-7: Get here.

Embassy instructions for UK residents are here. 

When you have accrued at least $10 sales on Smashwords, you can apply for a signed covering letter from them to produce with your documents.  Details here.

You need to provide proof of identity. "Either a valid passport (original or a notarized or certified copy); or at least two or more identity documents that are current. One must include a recent photograph. In addition to a passport, examples of acceptable documentation include: national identification card (showing photo, name, current address, date of birth and expiration date); civil birth certificate; foreign driver's license; or visa." A complete list of acceptable documentation can be found in Form W-7 instructions.

Post to: The United States Embassy  
24/31 Grosvenor Square
London W1A 1AE
Tel 0207-894-0476

Or go along there.  They're open Tues - Thursday 9 - 4.
It's complicated.

The best blog on this subject is Angela Stone's Quick Guide to the W-7 US Tax Form.

THEN when you've got your number, you fill out form W8-BEN: Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. Get here.

Smashwords has its own ebook store and offers free distribution to Barnes&Noble, Apple iBooks and more. How much income you get from each Smashwords ebook sale varies. It depends on whether the sale comes through from Smashwords' own sales site (85% of cover price), from an affiliate sale (via an e-reader, 70.5%) or from Premium Catalogue sales sites like Apple iBooks (60%) and Barnes & Noble.

For a $2.99 ebook you would earn:

$2.21 from each Smashwords sale
$1.84 from each affiliate sale
$1.27 from each Premium Catalogue sale.

The payments come through on PayPal.

For a detailed guide to publishing your own ebooks see:

How To Publish An Ebook On A Budget - An Author's Guide by Stephanie Zia

Buy in the UK here

In the US here


JTR said...

Hi. Some useful stuff here. I applied for and was given over the phone by the IRS an EIN number for tax exemption purposes. I told them I was a UK based author and they said the EIN was fine, I was effectively the sole proprietor of my own business - I didn't need to go to the US embassy - have I got this wrong?

Stephanie Zia said...

Thanks so much for sharing this. I Googled EIN: Employer Identification Number,,id=98350,00.html and checked the Smashwords' guidelines which state:
"When you apply for an ITIN or EIN, the IRS requires you also provide a hand-signed letter from Smashwords, written on Smashwords letterhead, stating your reason for requesting an ITIN. To obtain the letter from Smashwords, you must first have a $10 accrued balance. After you earn your first $10, click to your Payee Profile where you'll see the link to request your letter. Please DO NOT request it via the customer support link. Allow 4-6 weeks for Smashwords to supply you the letter." That you got your number over the phone without the letter and all the passport keruffle is excellent news and I shall update accordingly.

Anonymous said...

i applied for my ein today and i got it over the telephone. thanks for providing this information.