Just received notice from CJ.com (Commission Junction) regarding new tax laws, and that non-US citizens /
non-US publishers need to declare themselves so. Anyone running a business that uses US infrastructure or employees will need to pay tax. So managed web hosts seem to fall under that category. Self managed VDS hosts seems a bit of a grey area. Shared hosting very likely falls under the new US tax laws.
The legal jargon that everyone using CJ.com needs to accept or decline:
Please sign and attest to the following information. By completing this form and clicking SUBMIT FORM you affirm that:
Publisher represents and warrants that it does not have any employees or equipment located in the United States (“U.S. Activities”) that are involved in any way with the revenue that has been or will be earned by Publisher pursuant to the Commission Junction Affiliate Marketing program. U.S. Activities include, but are not limited to, owning a web server or owning a hosting service in the U.S., or having employees in the U.S. who are involved in either:
- Setting up Publisher’s web server, hosting service, or website
- Developing content for Publisher’s website
- Marketing to create a user base for Publisher’s site
- Telephone support for Publisher’s site
- Buying products for Publisher’s site
- Maintaining Publisher’s site
Publisher represents and warrants that it does not have any employees or equipment located in the United States (“U.S. Activities”) that are involved in any way with the revenue that has been or will be earned by Publisher pursuant to the Commission Junction Affiliate Marketing program. U.S. Activities include, but are not limited to, owning a web server or owning a hosting service in the U.S., or having employees in the U.S. who are involved in either.
So, if you are a UK web publisher that has a large American audience, you may have to consider moving your hosting to the UK to avoid the US tax man.
Let others know by Digging it.
You sure your assumption is true? Isn’t there a difference between *owning* and *using* US equipment? Technically and officially, you don’t own the web server itself (unless otherwise, when you buy the very equipment), when you use US hosting.
Is it common for UK affiliates to use hosts based in the US?
Yes, generally US hosts are cheaper than UK ones. Many people host with the likes of GoDaddy, and there are some pretty cheap VDS’s in the USA too. This site was hosted in the US until very recently.
With regards to your point Yuri, I admit I need to look further into it. From the first reading, I certainly got the impression that managed hosting would be a problem, as you are essentially employing the web hosts to look after your IT infrastructure, which is where you operations are really taking place. But this is certainly not clear on the email CJ.com has sent out to all its affiliates. I will investigate further and hopefully provide an update shortly.
Good post. As always you give a refreshing view on the subject, I always make a point of checking this blog and your feed.
I live in Dubai but have servers hosted in the US. I had spent some money with tax consultants in the US to get this point clarifed. I was finally told that leasing a hardware does not automatically include me the taxed category. Only when I own the actual hosted hardware does this become a problem.
That is good news Shanavas, I am glad that you shared it with us. Seems that they are playing fair after all. So, owning hardware is the issue, not leasing it.
This is what the Google Adsense program says:
https://www.google.com/adsense/static/en_US/TaxInfo.html
Currently, you are not liable as a US taxpayer if you just rent web servers / hosting services. If however, you own the server, or if you employ US people to write content or work on the website, you are liable.
I am still looking for the definitive answer to “what is employing someone to work on what produces income” … It is clear an employee does.
But I am not sure about a contractor that you find say at Elance and pay $300 for a script or an ebook. Technically they are independent contractors, but you are using US-based resources. Hmmm … so right now I would rather avoid using US persons.
It gets even more complicated if you look at the implications of getting marketing/business advice. Say you buy a product from an US guru, you are just purchasing a product. If you pay the US guru for coaching, you are getting services … For these situations I have not been abe to get a definitive answer from a tax lawyer yet. Everybody is guessing …
Yep, and guessing is not good. Really nobody should have to rely on guess work.