International artists releasing cover songs often lose a portion of their US-sourced royalties to tax withholding before the money ever reaches their distributor account, and the amount withheld depends entirely on whether their country has a tax treaty with the United States and whether they’ve filed the correct form. This isn’t a distributor fee or a licensing charge — it’s a separate tax obligation that catches many independent artists off guard the first time they see a smaller-than-expected payout from a US platform.
Understanding where this withholding comes from, who it applies to, and how to reduce it matters just as much as understanding mechanical licensing when you’re building a cover song catalog that earns from a global audience.
What is cover song royalty withholding?
Royalty withholding is tax deducted at the source before income reaches a foreign artist, applied by US-based platforms and payment processors on royalties considered US-sourced income. For musicians outside the United States, this typically applies to streaming and mechanical royalties generated when US listeners play their cover songs, since US tax law treats certain royalty payments to non-resident aliens as subject to withholding at the point of payment.
This is distinct from any distribution fee. A distributor like Globex Music charges a flat $1 per release with no annual fee and no per-cover licensing surcharge — withholding tax is a government requirement that sits on top of that, administered by whichever entity is legally responsible for collecting it in the payment chain.
Why does this matter more for cover songs specifically?
Cover songs generate two royalty streams — performance/streaming royalties and mechanical royalties tied to the compulsory license — and each can be treated differently depending on where in the chain the payment originates. A cover artist collecting mechanical royalties through the US Mechanical Licensing Collective, for example, is dealing with a US-based entity, which puts those payments squarely in scope for US withholding rules if the artist hasn’t established treaty benefits.
Original songwriters who also hold publishing rights sometimes have different reporting setups through their PRO, but cover artists — who are performers/recording rightsholders rather than the song’s copyright owner — need to track this separately for their master recording royalties and, where applicable, their MLC-administered mechanical income.
How much can be withheld?
Without a tax treaty benefit in place, the default US withholding rate on certain royalty categories for non-resident aliens is 30%, though the applicable rate and category depend on the type of income and the specific payer’s determination. Many countries have tax treaties with the US that reduce this rate substantially — sometimes to 0%, sometimes to a reduced flat rate in the range of 5-15% — but the reduced rate is not automatic.
To claim a treaty rate, artists generally need to file IRS Form W-8BEN (for individuals) with the relevant payer, certifying their country of residence and claiming the applicable treaty article. Without this form on file, payers typically default to the maximum statutory withholding rate as a matter of compliance, regardless of what treaty benefit the artist might otherwise be entitled to.
Does Globex Music withhold taxes from royalty payouts?
Globex Music passes through royalties collected from streaming platforms and mechanical licensing bodies, and any US-source withholding obligations are handled at the level required by law rather than added as an extra distributor charge. Artists should keep their tax documentation current — particularly a valid W-8BEN or equivalent form where applicable — since that documentation, not the distributor’s pricing model, is what determines whether a reduced treaty rate applies.
This is a useful distinction to hold onto: distributor pricing (the $1 per release, no annual fee) is a separate line item from tax withholding, and confusing the two leads artists to blame the wrong party when a payout looks smaller than expected.
How does this compare across distributors?
Tax withholding rules apply at the level of US law and the payment processor, not at the level of distributor pricing tiers, so this obligation exists regardless of which service an artist uses. Where distributor choice does affect net income is in the fees layered on top. DistroKid charges $44.99/year regardless of how many covers you release. TuneCore charges a $24.99 base fee plus per-cover licensing fees and a 20% commission specifically on social platform monetization. CD Baby charges $9.95 per single plus a 9% royalty commission that applies indefinitely, for the life of the release.
Globex Music’s flat $1-per-release model with no annual fee means the withholding tax question is the only variable cost international artists need to track beyond their initial release price — there’s no compounding annual fee or ongoing commission layered underneath it.
A worked example: three cover songs, three years
Consider an artist outside the US releasing three cover songs a year, each earning modest US-sourced streaming royalties. Assume, for illustration, a 15% treaty withholding rate applies to a portion of that income once the correct form is filed.
- Year 1: 3 releases at $1 each = $3 in distribution cost. Withholding reduces the taxable portion of US royalties by 15%, regardless of distributor.
- Year 3 (cumulative, 9 releases): $9 total distribution cost on Globex Music, versus $44.99 x 3 = $134.97 in DistroKid annual fees over the same period, or CD Baby’s $9.95 x 9 = $89.55 in per-single fees plus a 9% cut of royalties that never goes away.
The withholding rate is identical no matter which distributor is used — it’s a tax obligation, not a distributor decision — which means the real, controllable difference in net income over time comes from distribution pricing and ongoing commission structures, not from anything related to the withholding itself.
What should international cover artists do?
File the correct tax form with every platform or collection body that requests one, keep it current, and confirm whether your country has a US tax treaty before assuming the default rate applies. Artists should also check with the Mechanical Licensing Collective directly regarding mechanical royalty withholding, since that income stream is administered separately from streaming platform payouts.
Because Globex Music supports payouts starting from $10 USD, artists earning smaller amounts from a handful of covers can still access their royalties without waiting to hit a high threshold — which matters when withholding has already reduced the gross amount and every dollar of net income counts. Combined with fast moderation and a permanent, stable catalog listing across 200+ platforms, the practical cost of staying compliant on tax paperwork is small relative to what it protects: your actual take-home royalty from every stream your cover generates.
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