Hi! So basically my country (Kosovo) has no tax treaty with the US, and it seems that because of it, according to the Itch I'm subject to a 30% withholding rate on any income generated through Itch. My questions are:

There is basically no way around this without a tax treaty, right? And there is no point in entering a Tax Identification Number without a treaty either, right? Should I go about this in a different way such as try to open a business in the US instead and obtain a Foreign Tax ID?

Also, how exactly is this 30% applied? Is it applied after processing fees? How would a $10 transaction look in this case?

And lastly, would it be immoral if I tried to go as low as possible on the revenue sharing part with Itch to try and mitigate this %30 tax a little 😅? 

Itch by default keeps only 10% which is already low, Steam keeps 30% in comparison.

Going below 10% would be immoral, although technically possible. Considers that Itch must pay for all the infrastructure that allows having the website and downloading the game, in addition to processing the payment.

VERY IMPORTANT, it is not 30% of all transactions, only 30% of transactions made from the USA.

Creating a business in the USA prevents Itch from WITHHOLDING that 30%, but it does not exempt you from paying taxes in the USA, the difference is that you will have to present documentation of your company's profits to the IRS and pay the corresponding taxes. Doing this whole procedure is complex and costs money, it is recommended that you do it if you are really going to have a company that makes good profits, if you are only an independent creator, it is not worth it.
You could apply for an ITIN, but I couldn't tell you what benefits or penalties there might be over using your country's tax ID.

In order to request a payment from Itch, you must complete the tax interview where it is mandatory to present your tax identification. There is no way around this.
Plus, you have a 3 dollar fee for validating the tax interview.

Example:

10 from USA - 30% tax - 10% Itch - credit card commission = 5.5 
10 from Germany - 10% Itch - credit card commission = 8.5 Total = 14

PS: The balance shown by Itch is only an estimate, you have access to the final and detailed value only when you request payment from Itch.

PS2: An alternative is to use the direct payment system. But you should keep in mind that with this system, you are responsible for setting up payment methods and dealing with taxes, since each person who buys your game will be doing business directly with you and not with Itch.

Thanks a lot for the answer @hechelion!

I've read up a lot more on this in the meantime, and at first it seemed like opening up an LLC as a foreigner would be the best idea because you technically shouldn't be taxed on work that you do outside the US. But it seems the law has changed recently and if income from places such as Itch counts as Royalty, you still have to pay 26% tax on it.

Oh well. I'll have to see if there's a different way for me to avoid double-taxation I guess. As per your example, with a sale in the US I'd be instantly 45% down, plus the 20% fees and taxes on my end, and I'd only take 35 cents on the dollar. And I'm pretty sure I'd face the same 30% withholding fee if I did the direct payment method too.

Thanks again though!