From the buyer to your account
Royalty income tax rate on a data licence, US and UK
Updated
A payment for licensing data is often treated as a royalty. Before it reaches the seller, the payer may have to report it or hold some of it back, and the seller's company then pays its own tax on the profit.
What a US payer reports and holds back
A payer files Form 1099-MISC for at least $10 in royalties, and in some situations must withhold at the current rate of 24 percent as backup withholding.
Source: Tax on a data licence payment
Most US source income a foreign person receives is subject to US tax of 30%, and a reduced rate, including exemption, may apply under the Internal Revenue Code or a tax treaty.
Source: IRS, NRA withholding
What a UK payer and a UK company owe
When a royalty is paid to an owner whose usual place of abode is outside the UK, the person making the payment deducts income tax at the basic rate in force for the tax year; separate rules allow deduction at a treaty rate.
Source: Income Tax Act 2007, s906
A UK company's own licence income is taxed as profit: the small profits rate of 19% where the year's profit is £50,000 or less, and the main rate where it is more than £250,000.
Source: Tax on a data licence payment
Before you sign
These are the authorities' rules as we read them, not advice on a particular deal; a licence agreement should say who bears any withholding. Who pays and what they pay is on how much data sells for.