We're here to help you understand some common tax questions that pop up for Kobo Writing Life authors. While we can't offer specific tax advice (we're book lovers, not tax experts!), we can clarify how Kobo Writing Life operates regarding your earnings and taxes. Our goal is to make sure you have the information you need to confidently manage your author business.
Table of Contents:
- Understanding Your Tax Responsibilities
- Does Kobo Writing Life Issue 1099s or W-8BENs?
- How Does Kobo Writing Life Handle Sales Taxes?
- Demystifying VAT (Value-Added Tax)
- A Final Note
Understanding Your Tax Responsibilities
As an independent author publishing with Kobo Writing Life, you're essentially running your own small business. This means you're responsible for understanding and fulfilling your tax obligations based on your local laws.
When to Seek Professional Advice
Because tax laws vary so much by country, region, and individual circumstances, we strongly recommend contacting a certified tax professional for any specific questions about your personal tax situation. They can provide tailored advice and ensure you're meeting all your obligations.
Does Kobo Writing Life Issue 1099s or W-8BENs?
No, Kobo Writing Life does not issue tax forms such as 1099s or W-8BENs. Our Finance Team does not send out any reports for tax purposes other than the monthly sales reports that are posted monthly in your Kobo Writing Life Dashboard. You can find these invoices under My Account - Payment Information.
Kobo is a Canadian company, operating under Canadian tax laws, not U.S. tax laws. Because we're not a U.S. company, we don't have the processes in place to withhold U.S. taxes or issue U.S. tax forms like 1099s or W-8BENs.
When you publish through Kobo Writing Life, you act as the publisher of your books. We pay you for sales in a similar way that we pay other publishers – based on invoices derived from your unit sales. In short, think of Kobo as your distribution partner, and you as the business owner responsible for your own income tax reporting.
How Does Kobo Writing Life Handle Sales Taxes?
Good news! Kobo takes care of certain sales taxes so you don't have to. Kobo is responsible for collecting any applicable sales taxes at the point of sale, such as VAT (Value-Added Tax) or GST (Goods and Services Tax). We then issue these collected taxes to the respective governmental authority. As the author, you will get paid as per your contract without having to worry about collecting or remitting these specific sales taxes.
Your Income Tax Responsibility
The only taxes you will have to pay are the ones levied on the income you have accrued from book sales. These are the taxes on the earnings you receive from Kobo Writing Life. The specific rules and rates for these taxes are determined by your country of residence. You will need to declare this income in the same way you would declare any other regular income when filing your personal or business taxes.
For any specific tax questions, we strongly suggest contacting a certified tax professional.
Our Terms of Service
Specifically, section 4.8 of our Terms of Service states:
Each Party shall pay on behalf of itself, in addition to any other amounts payable under these Terms, any sales, use, excise, value-added, services, consumption, personal property, gross receipts or any other similar taxes that may be levied or imposed by any taxing jurisdiction upon such Party by reason of the transactions contemplated under these Terms, including Taxes.
This means that both Kobo and you are responsible for paying our own respective taxes as required by law. Kobo handles the sales taxes, and you handle your income taxes.
Demystifying VAT (Value-Added Tax)
If you sell books in territories that charge VAT, you may want to know how Kobo handles this tax. Let's break it down!
How Does Kobo Handle VAT-Inclusive Pricing?
Per our Terms of Service (section 4.1):
You shall provide Kobo with the Suggested Retail Price (“SRP”) for the Work, which shall be exclusive of any goods and service, sales or similar taxes (“Taxes”) and shall be inclusive of any of any value-added (VAT) taxes within VAT inclusive territories.
In VAT territories, Kobo uses VAT-inclusive pricing. This means the price you set for your book already includes the VAT.
When paying KWL authors their 70%, 45%, or 20% (depending on your book's price and royalty tier), we first "back out" the VAT. This is done based on the territory where the book is sold. Your royalty percentage is then calculated from the remainder of the retail price (after the VAT has been removed).
This process ensures that the tax authorities in the territory receive their appropriate taxes, and you, as the author, receive your respective percentage of the price with that chunk of tax removed. You don't have to worry about calculating or remitting this VAT yourself.
Providing Your VAT or GST/HST Number
If you have a VAT number (for non-Canadian authors) or a Canadian GST/HST number, please let us know! Providing us with your number allows us to reflect it accurately on your monthly sales reporting. Feel free to reach out to our friendly author care team directly—they'll be happy to help you update your account information.
A Final Note
Kobo handles the complexities of sales tax collection and payment (like VAT and GST) in relevant territories. Your main tax responsibility as an author is to declare and pay income tax on your earnings, according to the laws of your country of residence.
Always consult with a qualified tax professional for personalized advice!