Is Distrokid stealing non-US musicians' money? (Ask your accountant about tax withholding)

Recently, a Brazilian musician @Dan Vasc published a video claiming that Distrokid is stealing his money.

Distrokid’s own answer is that they are withholding those amounts for required US tax purposes, but as Dan has pointed out, it seems like Distrokid hasn’t always done this, and other music distributors don’t necessarily do this. Dan wasn’t exactly happy with Distrokid’s repeated advise to #AskYourAccountant.

So, what’s the deal with this?

Ah ah ah, you can’t get answers that easily! In this video, I want to encourage and inspire you to work with a tax accountant. Seriously, please, please, if you are a musician with international business and sales, invest in yourself and invest in your business by investing in great tax advisor. In this video, hopefully we can discuss the many, many, many questions you might want to #AskYourAccountant, because taxes are complicated and maybe, even if you don’t live in the US, there are some questions about US taxes that you might want to ask about.

0:00 Intro
1:49 DistroKid’s Recent Withholding on Non-US Musicians
3:07 The purpose of this video is to encourage you to talk to an accountant
3:42 Governments literally only want one thing and it’s…pretty reasonable, i guess
4:15 Can a non-resident alien have US source income?
6:11 If a non-resident alien has US source income, then what?
7:22 Withholding on US source income that is not effectively connected to a US trade or business?!?
9:44 Is a non-US musician’s income effectively connected to a US trade or business?
10:46 What does it mean for non-US musicians if their income is effectively connected?
12:42 Things non-US musicians might want to talk to their tax accountants about
13:49 Is there a right answer for everyone?
15:22 Are non-US musicians considering US taxes?

Dan’s Video “I WAS ROBBED | DistroKid Steals Money From Musicians”:
https://www.youtube.com/watch?v=UZ9P80XPIWY

DistroKid’s page on claiming tax treaty benefits:
https://distrokid.zendesk.com/hc/en-us/articles/360044282254-How-to-claim-tax-treaty-benefits-if-applicable-to-you-

The IRS’s page on withholding for non-resident aliens under the Fixed or Determinable, Annual or Periodic (FDAP) regime:
https://www.irs.gov/individuals/international-taxpayers/nra-withholding

The IRS’s page on effectively connected income (ECI):
https://www.irs.gov/individuals/international-taxpayers/effectively-connected-income-eci


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