How to (Legally) Reduce the Medium Tax Withholding to Only 10% In 1 Hour
Without using shady methods, but an excellent alternative created by a tiny, cold European country.

This is a piece of advice that I wished I knew from the beginning. Until September of the last year, I was losing 30% of all my writing income unnecessarily.
The royalties from my books sold at Amazon and my payments from Medium had 30% of the total value kept as US tax withholding.
For me, this sounded utterly unfair. I do not use public services in America. I am not in their stimulus check program. Why should I pay 30% of my hard-earned income to Uncle Sam? Maybe you experience the same issue.
But what If I told you that in one hour, one single hour, you may reduce your tax withhold rate to 10%?
There are 2 ways to do it. Likely, one of them will work for you.
Disclaimer: Nothing written here is tax or legal advice, but based on my own knowledge and experiences and for informational purposes only. Your country may have restrictions not mentioned in this article, like against residents setting up an offshore company, therefore it is up to you to check your local legislation.
1st — If your Country has a tax treaty with the USA, tell Medium about it.
There are around 60 countries with a valid tax treaty with the USA. The current list is Armenia, Australia, Austria, Azerbaijan, Bangladesh, Barbados, Belarus, Belgium, Bulgaria, Canada, China, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Germany, Greece, India, Hungary, Iceland, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, South Korea, Luxembourg, Mexico, Malta, Moldova, Morocco, Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russian Federation, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Tajikistan, Thailand, Tunisia, Trinidad and Tobago, Turkey, Turkmenistan, Ukraine, the UK, Uzbekistan, and Venezuela.
If you live in any of these countries, to decrease your tax withhold (sometimes even to zero!) all you need to do is to inform Medium (and Amazon if you publish there).
Do this by first going to the dashboard of the Medium Partner Program — in case you forgot, it is the place where you check your earning. There, on the upper part, there is a text box with the title Taxpayer Information, and just at the end of the box, click on Update taxpayer information.
Once you click on this button, there will be a form to complete with your details. After completing it with your details, Medium will issue a new 1042s US tax form for you.
If you live in a country mentioned above, few minutes after it, Medium will update your percentage of tax withheld to a new and lower value.
But what if your country of residence is not one of the mentioned?
Don’t despair, there is another route.
2nd — If your Country has no tax treaty with the USA, move (digitally) to Estonia.
If you are a digital nomad, maybe you already heard about the Estonian E-Residency program. For a while, it is trending in the remote work community because it deserves it.
This tiny European nation was the first place in the world to offer a program of digital residency, back in 2014. This advance is rooted in the country’s history, independent from the Soviet Union since 1991. In the same year, the Internet was created. The locals understood that as an opportunity to integrate the new global network into the government apparatus of the recently created state. The Estonian-based startup Xolo explains how this developed:
This led to the rise of ‘e-Estonia’. It’s the idea that Estonians should be able to do everything online with minimal bureaucracy. It’s been a remarkable success as all Estonians can now get a secure digital identity, so they can authenticate themselves online. That’s opened up huge possibilities, especially when it comes to running a business without having to be present in person to sign documents or access services.
Digital residency means that you, without ever been in Estonia, can incorporate a business there, open an Estonian bank account, have an Estonian fiscal number, and issue invoices for your services if you wish to do so.
The E-residency became a trend among remote, autonomous workers and freelancers because it opens the possibility of having a limited company in the European Union and benefits from the tax and economical treaties that exist between Europe and other countries.
It accomplishes its purpose because Estonia has an excellent digital infrastructure and all the processes to establish and incorporate your business can be done online.
I will repeat: you can run an Estonian-based business without ever stepping your feet in Estonia.
There are plenty of companies that provide help with the digital residency program. One pioneer is Xolo. With their most basic plan, Go, you can open an account in an Estonian bank and your only cost will be 5% of any payout. This plan also includes an invoice tool.
To reduce your Medium (or Amazon royalties) tax withhold to 10%, however, you will need the plan Leap. It costs 79 euros per month paid to Xolo, plus a one-time state fee of €220. It includes a full business account with IBAN, an Estonian incorporated company registered in your name, and Xolo accountants will ensure everything is reported on time and prepare your annual reports. You will just need to sign it. This last item is a big plus and may avoid headaches. Estonia, just like any other European country, requires that companies file their results and reports within a strict deadline.
How Much I Will Save?
Maybe the price of €79 plus a €220 onetime fee scare you and made you think if this value will be recovered at any point.
Here is the answer: It depends on what you will do with the money you receive from Medium, Amazon, or all other resources sent to your Estonian-based company.
In Estonia, they do not tax income earned abroad, but if at some moment you want to transfer the money from the Estonian bank account to your country, your local government may tax it. If you live in a country with no income taxes like Qatar or the Bahamas, this will not be a problem. Sadly, most places in the world have an income tax.
Let’s suppose you live in a country with a flat income tax of 9%. We will call this place Leviland, where a nice guy called Levi is in charge of everything.
Here are two scenarios:
1st Scenario
You make on average 1500 USD per month on Medium, Amazon, or on any other US-based company that has a 30% tax retention in financial remittances to Leviland.
If you send the money directly to your country, you will receive 1050 dollars.
If you incorporate a company in Estonia, Medium will send you $1350. After receiving the money in the Estonian bank account of your company, you transfer it to your bank account in Leviland, the place where you live.
You will declare this income to the tax authorities of Leviland and pay the 9% income tax on it.
Remain with you $1228.5. You pay the 79 euros (95 dollars) to Xolo or any other company that you hire to assist you, and you still have $1133.5.
83.5 dollars more than you would have if you never incorporated your company in Estonia. Maybe it is not much, but you can buy any of the 3 best things below $100 that I bought in 2020, or half of the 7 best business books of 2020 that I read.
2nd Scenario
Let’s imagine now that you are a successful publisher in Amazon or a writer in Medium. We are talking about the likes of Sinem Günel or Amardeep Parmar. You are making on average $4000 here. Or this is what you aspire to make, so you are already planning for the future.
However, you don’t live in Europe, but in Leviland, where there are no tax treaties with the US and Medium/Amazon must retain 30% of all your income. So you create your Estonian E-Residency and use it.
If you tell Medium/Amazon to send the money directly to you in Leviland, you will receive 4000*0.7 = $2800.
If you tell Medium/Amazon to send your income to your Estonian company, you will receive 4000*0.9 = $3600. Then, if you wish to do so, you send this money to your local account and pay the income tax of 9%. You still have $3240.
Here you saved a whopping 440USD. More than enough to pay the 79 euros (95 dollars) per month to Xolo.
I used Xolo in this article because I know them better, but there are plenty of other startups that help entrepreneurs and remote workers with the E-residency program. I also recommend anyone interested in the process above check this page from the Estonian government.
Congratulations, now that you know an alternative to save some precious bucks, look at this video about research before starting a business.
Levi Borba is CEO of expatriateconsultancy.com, creator of the channel Small Business Hacks, and a best-selling author. You can check his books here, his other articles here, or his Linkedin here.