Why Spotify Withholds U.S. Tax From Non-U.S. Rights Holders
Spotify AB, the Swedish company that operates the Spotify platform, distributes royalties to artists, labels, publishers, and other rights holders worldwide. When those royalties originate from streams by listeners in the United States, they are classified as U.S.-sourced royalty income under the Internal Revenue Code. Spotify — or its U.S. payment intermediaries — acts as a U.S. withholding agent and is legally obligated to collect tax information from every payee and to withhold a percentage of U.S.-sourced payments when that information is not on file.
The default withholding rate for non-U.S. persons who have not provided a valid tax identification number is 30% of U.S.-sourced royalty income. If you submit a Form W-8BEN without an ITIN, Spotify may still apply a withholding rate — often 30% — because the treaty benefit cannot be confirmed without a valid U.S. taxpayer identification number. Only when you provide both a completed W-8BEN and a valid ITIN can the applicable tax treaty rate be applied to your payments.
How Withholding Rates Compare for Spotify Rights Holders
The table below shows how the three main scenarios compare for a non-U.S. rights holder receiving royalties from U.S. Spotify streams.
| Situation | Withholding Rate | Applied To |
|---|---|---|
| No tax form submitted | 30% | U.S.-sourced royalties |
| W-8BEN submitted, no ITIN | Up to 30% | U.S.-sourced royalties |
| W-8BEN with valid ITIN, treaty country | 0%–15% (treaty rate) | U.S.-sourced royalties |
Many U.S. tax treaties — including those with Canada, the United Kingdom, Australia, Germany, the Netherlands, Sweden, and dozens of other countries — set the withholding rate on royalties at 0%. For rights holders in those countries, obtaining an ITIN and submitting a correctly completed W-8BEN can eliminate U.S. withholding on Spotify royalties entirely. Rights holders in countries without a U.S. tax treaty remain subject to the 30% statutory rate, but an ITIN is still required to file a U.S. nonresident return and recover any over-withheld amounts.
How to Apply for an ITIN as a Spotify Rights Holder
Most non-U.S. Spotify rights holders apply for an ITIN under Exception 1 of the IRS rules — the exception that covers non-residents receiving U.S.-source passive income (including royalties) that is subject to withholding at source. Under this exception, you do not need to attach a completed U.S. tax return to your Form W-7 application. Instead, you provide supporting documentation that establishes the royalty income and the withholding relationship.
The application steps are:
- Confirm that your country of residence has a U.S. income tax treaty covering royalty income and identify the applicable treaty rate.
- Obtain a letter or withholding statement from your distributor or Spotify’s payment intermediary confirming that you receive royalty income subject to U.S. withholding and that an ITIN is required for information reporting.
- Complete IRS Form W-7 (December 2024 revision), selecting Box h (Other) and noting “Exception 1 — Royalty Income” on the dotted line. Also check Box a if you are claiming a treaty benefit.
- Have your identity documents verified by an IRS-authorized Certifying Acceptance Agent, by mailing originals to the IRS, or by visiting a U.S. IRS Taxpayer Assistance Center in person.
- Submit the complete package and wait for the IRS to issue your ITIN — typically 7 weeks outside of peak tax season, or 9 to 11 weeks during the January 15 to April 30 peak period.
- Provide your ITIN to your distributor or directly to Spotify’s tax interview, and submit a completed Form W-8BEN claiming the applicable treaty rate.
For a field-by-field walkthrough of every line on Form W-7, see the Form W-7 line-by-line guide published on nolly.com. If you are unsure whether your situation qualifies for Exception 1 or whether a tax return must be attached instead, the guide on applying without filing a tax return explains each exception in detail.
The CAA Advantage for Artists Applying From Outside the U.S.
The identity verification step is the most common obstacle for rights holders applying from abroad. The IRS requires either original documents or documents certified by an authorized source — a notarized photocopy is never accepted and will result in rejection.
A Certified Acceptance Agent (CAA) is an individual or organization that the IRS has specifically authorized to verify and certify identity documents on its behalf. When you work with a CAA, you present your passport or other accepted documents for review, the CAA certifies copies, and those certified copies accompany your W-7 application. Your original passport never leaves your possession and is never sent internationally.
For rights holders publishing music from Canada, the United Kingdom, Australia, Germany, or anywhere else outside the United States, this matters significantly. Mailing an original passport abroad introduces transit risk, weeks without a primary travel document, and the possibility of documents being lost or delayed in customs. The CAA route removes all of those risks. nolly.com’s team includes IRS-Certified Acceptance Agents and manages the complete application process — from document review through IRS submission — for rights holders worldwide. You can learn more about applying without mailing your passport before getting started.
Frequently Asked Questions
Does every non-U.S. Spotify rights holder need an ITIN?
Not necessarily — but without one, the applicable withholding agent cannot apply a treaty-reduced rate, and the default rate applies to your U.S.-sourced royalties. If your country has a U.S. tax treaty covering royalties and you want to reduce or eliminate withholding, an ITIN is required. Even rights holders in countries without a U.S. treaty may need an ITIN eventually if they wish to file a U.S. nonresident tax return to recover any over-withheld amounts.
Can I recover tax that has already been withheld from my Spotify royalties?
If U.S. tax has already been withheld from your royalties and you are entitled to a lower rate under a tax treaty, you may be able to recover the excess by filing a U.S. nonresident tax return (Form 1040-NR) for the relevant tax year. You need a valid ITIN to file that return. The 1040-NR reports your U.S.-sourced income, applies the applicable treaty provisions, and calculates any refund owed. Filing is the only way to recover previously withheld amounts — it does not happen automatically.
How long does it take to get an ITIN and update my tax information with Spotify?
The IRS typically takes 7 weeks to process an ITIN application outside of peak tax season (January 15 to April 30), and 9 to 11 weeks during peak season or for applications submitted from outside the United States. Once you receive your ITIN notice from the IRS, you provide it to your distributor or enter it into Spotify’s tax information settings alongside a completed Form W-8BEN — the reduced withholding rate applies to payments from that point forward. Applying as early as possible minimizes the period during which the higher default rate applies.
Ready to Apply for Your Spotify Royalties ITIN?
nolly.com prepares and submits your ITIN application — including Form W-7, identity document certification, and all supporting documentation. Our IRS-Certified Acceptance Agents verify your passport in-house so it never leaves your hands.
nolly.com is a private, independent platform and is not affiliated with any government agency. ITINs and EINs are issued solely by the Internal Revenue Service. nolly.com assists clients in preparing and organizing documentation and does not issue, register, or approve any government identification number. This article is general information, not tax advice. Individual circumstances vary.
