Any tips for dealing with international tax withholding?
I have had a couple of instances where companies want to withhold a portion of the payment as they believe they are required to withhold local tax (so far, in Argentina and Thailand). I think they are mistaken. It looks like they are treating software licenses as royalties, whereas the usual tax definition of royalties seems to be for rights to the copyright, e.g. if they were to reproduce and sell the software themselves. Licenses for simple use of software doesn’t usually count as royalties and should not be taxed as such.
However, different countries might have different interpretations in their law, so it is difficult to argue that point of view remotely.
To make things more complex, it appears that there are double tax treaties in place that mean I can claim a tax credit for the tax paid. However, I would rather get the full payment, and pay tax locally where required.
If I just add the tax amount on top I probably end up overcharging them due to the tax credit, as well as jeopardizing the sale.
Is there any easy way to deal with this, other than find a tax expert to review the rules each time I sell into a different country? Other companies selling internationally must have been down this path before.