Transfer money from DistroKid to your own bank account can be very frustrating and you will not get specific advice when asking the DistroKid support. There are also very high fees to get your money at least if you are located in Europe like our company. We mean you’ll will lost hundreds of dollars if you don’t know what you do.
In this article we will share some insights and will give value mainly for artists living in Europe.
Take care
Taxes for musicians can be very complicated. We are a Record Label from Spain and we are no experts in taxes. We have consultants for that matter. Your specific case might be totally different. Please consult a tax lawyer if you want professional advice.
What are the ways to transfer money from DistroKid?
DistroKid uses a payment workflow provider called Tipalti and you can choose multiple payment methods.
You can find the different fees in DistroKid’s website. However, they don’t include the foreign exchange rate (fx) which means there are some serious hidden fees (not from DistroKid) but from the service providers which will eat up your hard-earned royalties. For non-U.S citizens/Organizations, depending on which payment methods you choose your cost will vary between 3.5%(!) – 5.1%(!!) if transferring $1000.
However, we will explain how to skip all fx fees to reduce this to only around $10 for a transfer of $1000.
Tipalti Fees DistroKid
- ACH (the U.S. only) — Also known as “direct deposit.” The money goes straight into your bank account. This is how most employers in the U.S. pay their employees. Fee is only $1 per payment. This is what we will configure.
- eCheck (U.S.) — This is like ACH, but as a check in your bank account. You don’t want a physical check. To expensive to put in your bank later, complicated, too much time to be sent and risky.
- eCheck (non-U.S.) — Same as eCheck above.
- Check — We don’t want that!
- PayPal — Fast, cheap, works in most countries but outside the U.S. Amounts over $10,000 will be split into separate payments and you must pay expensive conversion fees to euro (fx).
- Wire Transfer (U.S.) — Too expensive and only for real USA bank accounts.
- Wire Transfer (SWIFT International in local currency) — Too expensive because fx conversion again.
- Wire Transfer (International in USD) — You need a bank account in USD in dollars. No option because these are expensive and complicated to open as well at least in Spain.
The cheapest way to transfer royalties from DistroKid to Europe, UK and internationally
The cheapest way to withdraw money from DistroKid is ACH + Wise.
This setup is pretty straightforward but will require a Wise account with at least two accounts configured inside, one in euros and one in dollars. The best of all, that’s free of charge. This will give you two advantages:
- Access to an ACH account means you can transfer money in USD for $1 (Bigger amounts too)
- The ability to transfer money internationally with the market’s lowest fx-rate. Meaning your total fees will be bellow 1%.
Here’s how you set it up in DistroKid. You will need:
- A Wise account (previously called TransferWise). Create an account before you start this guide and a USD account inside. It’s free. You’ll only need to transfer to wise some small account like $10 and verify your account with your id and some bill.
- Your ACH details from Wise: Routing Code, Account Number, Address
Let’s start:
Go to DistroKid
Choose payment method
Take care. If you are not entering as your billing details first an postal address in the United States than you’ll not get the option to choose Direct Deposit / ACH. So fill in the billing data (first page) (not the taxes form) the bank address of your new bank account in USD that you created on wise and your name.
Choose tax form
Choose what’s applicable for you. We will show what’s applicable for us, a business in Spain. In your case can be an individual not living in the USA so you’ll need to fill the W8-BEN form.
Fill in bank and contact details (Wise)
Fill in W8-BEN or W8-BEN-E claim of treaty benefits
Fill in your tax residence (probably where you live most days of the year). Fill in what’s applicable to you. Note that we are only giving you what’s applicable to us. In the W8 form is important to use your real living data in Europe, your taxes number and so on (you’ll save taxes later).
Submit evidence and review
Provide evidence with the asked documents (id for example). Make sure it’s updated. If you’re asked to provide some attorney document than you checked incorrectly in the last step an invalid option (we have the problem the first time as well). Normally you’ll not have an attorney representing you in the USA. Uncheck that option and you’ll be good to go.
How long will it take to transfer money from DistroKid?
When you have filled in the form, they’ll review your document and in two weeks more or less you are ready to withdraw the money. It takes longer write directly to the Distrokid support and they’ll accelerate the process.
After your account was reviewed, go to distrokid.com/bank and click on the obvious “Withdraw earnings” button. DistroKid will send your royalties to your Wise account. This will usually just take one or two days. However, DistroKid says it can take 1-14 days. Later you can transfer directly using Wise with SEPA from your USD account to your own European bank account. In this case the conversion fee will be one of the best on the market. Another possibility is to use directly the money in the USD account to pay bills or to pay with an associated credit card in USD. In this case you’ll save all the costs to convert the money. But this is a complicated setup for other time.
How to get rid of 30% withholding tax from DistroKid
If you are a non U.S resident you can get rid of the 30% tax that Distrokid retains with some simple steps. This is only applicable if your country has a tax treaty with the United States (many do).
The first time or once a year you will be prompted when making a withdrawal in your DistroKid bank to fill in the tax form W8 applicable to you.
For organizations→ Fill in the W8-BEN-E tax form
If Individual → Fill in the W8-BEN
In that document don’t forget to mark the checkbox saying that your country has a tax treaty with USA, the name of the country and your taxes number on that country (very important). In this case USA will not retain any amount of the transferred money.
Hopefully we’ve saved you a lot of worry and a little money when it comes to receive your hard-earned music rights earnings. If you want to continue accessing information as valuable as this, do not forget to follow us on our different social networks to be informed when we publish new articles.