Tax Talk (English edition):
Germany’s Withholding Taxation of Extraterritorial Royalties – New surprises every week
Thursday, December 17, 2020, 11-12 am
2020 is the year when Germany adopted the taxation of extraterritorial income. Thanks to legislation in place one way or another since 1925, the country is now able to tax income made by non-resident taxpayers outside of Germany. Royalties paid for the use of intellectual property rights, or any sales price paid between non-residents connected to IP registered in a German public register, are deemed subject to source taxation in Germany.
As a result, many non-resident multinational groups have already contacted the tax authorities about agreements connected to licenses and IP transfers. In some cases, they have even paid withholding taxes going all the way back to 2013.
Others are now preparing to follow in their footsteps. As such, they are complying with the Finance Ministry’s latest circular of 6 November 2020, requesting tax declarations and the withholding of tax from non-resident licensees and transferors of IP.
Arguably, tax compliance has many weaknesses and can create international tax conflict. Yet, it requires those affected to actively cooperate with the Ministry’s legal position. Complicating matters somewhat, the very same Finance Ministry has now published a draft bill stating that this exact tax law is to be retroactively scrapped!
In this Tax Talk Dr. Christian Engelen and Dr. Lars Haverkamp will discuss recent developments, their implications for multinational groups and give advice on how to approach any relevant tax declarations for the past, present and future.
Due to the international nature of this topic, the Tax Talk will be held in English.
Dr. Christian Engelen
Tax Advisor, Master of Science
Dr. Lars H. Haverkamp, LL.M. (Christchurch)
Lawyer, Certified Tax Lawyer
You can sign up by clicking on the following link.