Purchases of Software from Foreign Companies: Software licensing fees are classified as royalty payments by the Internal Revenue Service. Depending on the Income Tax Treaty provisions with the foreign company’s country of operation (if that country has an income tax treaty with the U.S.), these software licensing fees would be subject to withholding at a rate of 0% to 30%. Training provided by the foreign company to the University’s employees would be taxable at 30% unless the foreign company can provide the University with a valid Form W-8BEN. If you make any purchases that fall under the parameters listed above, you need to contact Sandra Goodwin, 314-935-8335 in the Tax Department about withholding issues. |
