Please refer to our previous blog from November 26, 2020 for more context.
The German Federal Government adopted the draft bill of an 'Act to Modernise the Relief from Withholding Tax and the Certification of Capital Gains Tax' on January 20, 2021. The key point of this draft bill with regard to IP registered in Germany is the revision of the anti-treaty shopping rule (draft Section 50d (3) Income Tax Act (ITA)) as well as amendments to the provisions governing the relief procedure for foreign taxpayers from withholding tax (draft Section 50c ITA).
The repeal of non-resident tax status for granting and transfers of rights based on the mere entry of rights in a domestic register intended in the ministerial draft (November 2020) was not adopted in the government bill. By letter dated 6 November 2020, the German Federal Ministry of Finance [BMF] confirmed the existing tax liability upon transferring or selling a right (e.g. patents) where entered in a domestic public register. According to reports, a simplified procedure is to be created within the administrative channels for cases which are subject to non-resident tax status and withholding tax solely on the basis of entry not suffice. The exception for investment funds is no longer included in the planned revision of the anti-treaty/directive shopping rule. According to the explanatory memorandum, the reason for this is the potential abuse of tax arrangements.
We assume that the proposed simplified procedure should be applicable for Swiss IP owners in the future. We will keep you informed as soon as such procedures are defined that international Swiss structures may be declared retroactively under the new procedure rules.