Elect taxation on a net basis
Non-resident taxpayers who are citizens and residents of
EU / EEA countries are able to elect taxation on a net basis with
respect to income from artistic, athletic, acrobatic or similar
performances, income from utilization of such performances, or
income from service on a supervisory board. This permits the
deduction of expenses that are directly related to the receipts.
Based on a recent announcement of the Federal Ministry of
Finance, these principles also apply to royalty income. Where
tax is withheld on the net amount, a standard tax rate of 30%
applies for individuals. The tax rate for non-resident corporate
entities is 15%
Payments of interest, royalties, and licensing fees are generally
exempt from withholding tax pursuant to EU Interest and Roy-
alties Directive (2003/49/EC), provided the payments are made
between certain associated enterprises within the European
Community (minimum shareholding of 25%).
This rule also
applies to royalty payments between permanent establishments
of affliated enterprises within the EU. Generally, the entire tax
amount is withheld and remitted to the tax authorities. Taxpayers
may then apply for a refund. It is, however, also possible to
obtain an exemption certifcate from the German Federal Central
Tax Offce (Bundeszentralamt für Steuern).
A payment is only
exempt from withholding taxes if, at the time of payment, the
payer has a valid exemption certifcate.
EU Forecast
euf:ba.18g:57/nws-01