Right to tax interest exclusively
Many double tax treaties allocate the right to tax interest exclu-
sively to the country of residence of the lender. Hence, despite
the fact that the interest is taxable under national law, Germany
may not retain its right to levy (withholding) tax. Those double
tax treaties that grant Germany the right to withhold tax provide
for a withholding tax rate of up to 15% .
Granting of licenses by foreign licensors to licensees residing in
Germany: Royalty payments are subject to non-resident tax lia-
bility and are to be taxed with a final withholding tax rate of 15%
of gross royalty revenue. When the provisions implementing the
EU Interest and Royalty Directive apply (EU Directive 2003/49/
EC; § 50g EStG (Income Tax Law)), relief from withholding for
payments of royalties is possible. Under German double tax trea-
ties, the exclusive right to tax royalties is in most cases allocated
to the country of residence of the licensor.
However, when Germany retains the right to withhold tax, a withholding tax rate
of up to 25% may be provided for by the relevant double tax
treaty , re- Table of withholding tax rates).
EU Forecast
euf:ba18f:170/nws-01