We would recommend to always declare any income generated at eduki. However, it is important for you to know that eduki cannot provide any legal tax advice. If you have specific questions on your tax declaration, please refer to a tax advisor or your local tax authorities.
Below you will find some information that might help you in this process.
eduki is a German company
eduki is registered in Germany, so any earnings you receive will come from a German bank account and the amount will be issued in euros. Please consult your bank for any international transfer fees as well as currency exchange fees.
The documents you will receive to acknowledge the earnings you have made (credit notes, see below) are in accordance with German laws, so they might differ to what you are used to in your country of residence. Please refer to a tax advisor or your local tax authorities if you are unsure of whether they will be accepted in your local tax system. Please bear in mind that we will not be able to make any accommodations regarding the format of the documents.
Relationship between authors and eduki
When authors upload materials to eduki, they submit a legally binding offer to license their material in their role as authors (‘author contract’). Through this licensing, they receive a portion of the purchase price (the licence fee) each time one of their materials is purchased.
The income generated via eduki therefore counts as income from self-employment. For technical and organisational reasons, we spare authors the work of sending us a monthly invoice, which would be the usual method for self-employed work. Instead, we send authors a credit note on months where they have earned at least 10€, stating the amount they have earned on licence fees that month.
To summarize, authors don't sell their materials directly to clients. They license their materials to eduki. This could be of importance for your tax declaration.
VAT
If your fiscal address is outside of Germany, you will need to check with your local authorities how to handle your income-related VAT. We are happy to add any VAT numbers to the monthly credit notes that we send out, if this is important for your documentation.
In your sales overview you will see that the VAT applied to the sale of your material may differ from country to country. This is because eduki pays taxes in Germany and has to declare sales made to different countries this way.
By the way, the materials offered at eduki fall into the category of e-books, which is why the VAT percentage applied to the sale of materials is reduced in some countries, e.g. 7% instead of the usual 19% in Germany or 2,6% instead of the usual 8,1% in Switzerland.
Withholding tax
What is withholding tax?
If your fiscal address is outside Germany, we are obliged under section §50c of the German Income Tax Act (EStG) as well as the double taxation agreement to withhold a so-called withholding tax of just under 16% (incl. solidarity surcharge) from your fee. Germany has a double taxation agreement (DTA) with some countries, which means that these countries paw a lower tax or are completely exempted from it under certain circumstances.
There are therefore three different cases:
1) Germany has a DTA with the country where you have your fiscal address:
In this case, no additional tax deduction from your fee is necessary at first. If you reach a tax threshold of €10,000 per year, the full withholding tax rate of 16% will be due. However, you have the option of submitting an exemption application so that you are exempt from this tax for a certain period of time.
Some examples of countries with a DTA are: Austria, Switzerland, Belgium, France, Italy, Spain, Greece, Finland, Croatia, Great Britain, Georgia, Hungary, Ireland, Israel, Iceland, Japan, Liechtenstein, Moldova, Malta, Netherlands, Norway, Russia, Sweden, Turkey, USA, South Africa, Canada
2) Germany does not have a DTA with your country of tax residence:
We are obliged to deduct the full withholding tax rate and solidarity surcharge from your fees and pay it to the Federal Central Tax Office. In concrete terms, this means that we will deduct this tax of 16% directly from your fee and show it accordingly on your credit note.
Some examples of countries without a DTA are: Colombia, Chile, El Salvador, Peru, Guatemala, Cameroon
3) Germany has a residual tax agreement with your country of tax residence:
In this case, the full 16% withholding tax is not due, but an agreed residual tax. The amount of this tax depends on the country in question. We are obliged to withhold this residual tax rate from your earnings from the first sale and pay it to the Federal Central Tax Office. Should you earn more than €10,000 per year at eduki, the full withholding tax of 16% would apply from this point onwards (15% withholding tax plus 5.5% solidarity tax, which is credited against the withholding tax). To avoid this, it is possible to submit an exemption order in advance in order to remain at the lower rate of the residual tax.
Some examples of countries with a residual tax agreement are: Costa Rica (10%), Mexico (10%), Argentina (15%), Venezuela (5%), Luxembourg (5%), Bulgaria (5%), Romania (3%), Poland (5%), Ukraine (5%), Portugal (10%), Morocco (10%), Lithuania (10%), Sir Lanka (10%), Kazakhstan (10%)
The number between parenthesis is the agreed residual tax that will be withheld from the first sale.