Excursus: Withholding tax when streaming

If performers and musicians who are resident abroad receive a fee for the streaming of their performances, it is necessary to determine whether withholding tax must be paid in Germany pursuant to Section 50a EStG. The following questions are crucial in this regard:

• Is the performance being streamed live or will it be pre-recorded?
• Will the performance (the recording) take place in Germany or abroad?
• Will the recording be used in Germany or abroad?
• Does the transaction concern a purchase of rights or a transfer of ancillary copyrights?

In the case of live broadcasts where the performance (living room concert, etc.) is recorded in Germany and shown (exploited) by the artist themselves or by a theatre in Germany, withholding tax must be paid in accordance with Section 50a (1) No. 1 (for the performance) or No. 2 (for the exploitation of the performance) EStG.

The difference between the fee for the performance pursuant to Section 50a (1) No. 1 EstG and that for the exploitation of the performance pursuant to Section 50a (1) No. 2 EStG is relevant with regard to the mitigation threshold in the amount of EUR 250.00 provided for in Section 50a (1) No. 1 EStG. Only the performance fee is subject to the mitigation threshold.

In the case of mixed contracts, it is therefore necessary to check whether the fee is normally paid

• for the performance only or
• for the performance and the exploitation of the performance.

Focus of the contract: performance

In the case of a contract of a presenter from abroad who performs in Germany and whose performance is then broadcast, the focus is on the payment of his performance and not on the payment for the exploitation of the performance (cf. BMF letter of 25 November 2010 marginal no. 103). It stands to reason that in the case of a uniform contract for a concert performance which the organiser is allowed to live stream, the focus is also the performance, in which case the mitigation limit can also be applied. However, this must be clarified with the Federal Central Tax Office in each individual case.

Otherwise, the usual exemption reasons apply (see Withholding tax - performances).

Mixed contract – performance and exploitation

If the fee for an overall contract is paid both for the performance and the subsequent exploitation of the performance, a split of 20% for the exploitation and 80% for the performance is to be assumed unless the parties have agreed on a different split (cf. BMF letter of 25 November 2010 marginal no. 87). In this case, too, the BZSt can be contacted to determine whether the granting of rights is of such secondary importance to the performance that the entire fee can be regarded as a fee for the performance.

It may be possible to obtain an exemption for performances and licenses (see Withholding tax - performances / Withholding tax - licenses)

Separate contract for streaming a performance

If a separate contract is concluded for the livestream (possibly even with another organiser), the fee paid for the livestream falls under "exploitation of the performance" pursuant to Section 50 a (1) No. 2 EStG (cf. BMF letter of 25 November 2010 marginal no. 102) and the mitigation threshold does not apply. An additional complicating factor in this scenario is that no exemption for licenses can be claimed for the portion of the fee attributable to the livestream. The BMF letter of 25 November 2010, marginal no. 87 states:

"The remuneration for a live broadcast is not considered a licensing fee, but rather a fee for an activity performed in person."

This means that no exemption can be claimed for live broadcasts under the relevant DTA on the basis of a licensing fee. Nevertheless, it is still possible to try to obtain an exemption from the Federal Central Tax Office.

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In the case of live broadcasts that are recorded abroad, no tax is withheld pursuant to Section 50a (1) or No. 2 EStG due to a lack of domestic income (cf. BMF letter of 25 November 2010 marginal no. 102, example a).

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In the case of an agreement with actors for the subsequent streaming of a performance, rights are granted under the German Copyright Act (Sections 73 ff UrhG), meaning that withholding tax must be paid in accordance with Section 50a (1) No. 3 EStG.

Limitation: no withholding tax is payable in case of a final transfer of rights of use

However, the withholding tax pursuant to Section 50a EStG is payable for every instance of the granting or transfer of rights of use by an artist resident abroad. It only applies to the temporary transfer of a right of use. Withholding tax is not payable in the case of a final granting/transfer of rights.

The transfer of rights is assumed to be a final transfer of rights in two cases in particular:

Permanent exploitation (complete transfer of a right)
Income from the permanent exploitation of rights is not subject to withholding tax for licensing fees. However, this exception rarely applies, since rights of use to a copyrighted work cannot be transferred completely (cf. Section 29 (1) UrhG; cf. also BFH ruling of 24 October 2018, I R 69/10). This is due to the legal nature of copyright and the associated personal rights. Accordingly, withholding tax must be deducted in the case of the granting of rights to use a copyrighted work (precisely because the transfer is not classified as permanent).

In the case of ancillary copyrights (e.g. recordings of performers/singers pursuant to Sections 77,88 UrhG etc.), a transfer of the rights to the recording of the performers can be agreed for an unlimited period of time based on the logic of the Copyright Act (total buyout). According to this, a total buyout in the case of ancillary copyrights would mean that no withholding tax has to be paid; cf. also page 58 here (only available in German).

Consumed rights
In the case of consumable rights, the transfer of rights must also be assumed to be final. This also applies to consumable rights to a copyrighted work. This includes, for example, the exclusive right to broadcast the premiere of a play pursuant to Section 12 UrhG, since this right will have been consumed once the premiere is over. No withholding tax is payable in this case.

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