Germany: Simplification procedure for non-resident tax liability when rights listed in domestic registers

Germany granted a simplification procedure for non-resident tax liability when rights listed in domestic registers.

Procedure for non-resident tax liability when rights listed in domestic registers

The German Federal Ministry of Finance (BMF) has granted a simplification procedure for non-resident tax liability arising from transfers of rights in cases when the right is merely entered into a German public register.

If certain conditions are met, a withholding tax can be waived. The simplification procedure originally applied to consideration already received by the payment creditor (cases in the past) or that was still to be received up to and including 30 September 2021. Among other things, the other requirements stipulate that an application to the German Federal Central Tax Office (BZSt) for exemption from tax deduction must be made until 31 December 2021.

The guidance (dated 14 July 2021) has now extended this deadline. The simplification procedure can be used also for consideration received by the payment creditor after 30 September 2021 but before 1 July 2022. The deadline for application at the BZSt for exemption from tax deduction has been extended until 30 June 2022—for both consideration received before 1 October 2021 and consideration received after 30 September 2021. The other requirements of the BMF circular (dated 11 February 2021) continue to apply without change.

The simplification rule covers cases which are subject to non-resident tax liability and withholding tax solely based on entry in a domestic register and for which, on account of a double taxation agreement, no German tax liability ultimately arises. No other domestic nexus (e.g. use of the rights in a domestic permanent establishment) may exist. The rule applies for considerations already received by the licensor (creditor) or still to be received up to and including 30 June 2022.

Read an August / September 2021 report [PDF 348 KB] prepared by the KPMG member firm in Germany

 

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