Germany: Proposals concerning withholding tax and capital gains tax

Germany: Withholding tax and capital gains tax

The German federal government in January 2021 adopted a draft bill to “modernize” the provisions for relief from withholding tax and the certification of capital gains tax.


The draft bill addresses the following:

  • Revision to the anti-treaty shopping rule—specifically, the anti-abuse rule would undergo substantial revision, and would provide that the amendments are generally applicable in all open cases, unless the anti-treaty shopping rule in the version applicable at the time the income accrued does not prevent the claim for relief.
  • Amendments to the provisions concerning relief from withholding tax for foreign taxpayers
  • Capital gains tax and information regarding tax certificates and withholding tax, reporting obligations to the Germany’s central tax office (BZSt), and liability in the event of incorrect tax certificates
  • Reorganization tax and a prohibition on offsetting losses for certain arrangements involving financial instruments and participations
  • Amendments to the provisions on the arm's length principle—read TaxNewsFlash

Read a February 2021 report [PDF 357 KB] prepared by the KPMG member firm in Germany

Other recent tax developments in Germany include the following items:

  • The Tax Act 2020 was published in the federal law gazette (Bundesgesetzblatt), and the law includes certain technical amendments and other changes that are in line with European Union (EU) law and judgments of the Court of Justice of the European Union (CJEU) and the “non-application laws on judgments” by the German federal tax court (BFH) specifically concerning:
    • Investment deductions: Change in eligibility requirements
    • Benefits in kind and allowances: Definition of benefits provided "in addition to wages already owed" (additionality requirement)
    • Implementation of the EU VAT e-commerce package
    • Relocation of electronic accounting: Approval requirement now only for relocation to non-member states
  • A draft bill presented in the lower house of the German parliament (Bundestag) would extend the tax return deadline for the 2019 assessment period—a proposal intended to address challenges presented by the coronavirus (COVID-19) pandemic. Read TaxNewsFlash
  • An amendment to the German stock corporation law (AktG § 302) may require the modification of existing profit-transfer agreements.

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