Withholding tax - licenses

The following information applies only to income of self-employed artists that is based on the granting or transfer of rights of use, in particular rights under the Copyright Act (hereinafter "licensing fees").

Licensing fees: Section 50a EStG defines the term licensing fees as follows: Licensing fees are fees "paid for the granting of the use of or the right to use rights, in particular copyrights and industrial property rights, derived from industrial, technical, scientific and similar experience, knowledge and skills, for example, plans, prototypes and processes".

Taxation of income: Where there is no cross-border income, licensing artists and creatives (as natural or legal entities) simply take care of their own (corporate) income tax. The parties liable for the remuneration (clients, organisers, theatres, etc.) are not involved in the taxation of the artists' (corporate) income. This changes if there is cross border income.

Cross-border income: licensing artists based abroad who grant or transfer rights of use that are exploited in Germany are deemed to be in receipt of cross-border income. In the case of licensing paid to artists who are neither domiciled in Germany nor habitually reside in Germany, it must be determined who is responsible for paying the income tax (hereinafter referred to as "withholding tax"), which is sometimes also referred to as "foreigner tax" within the industry, and where it must be paid.

Where: Section 49 (1) Nos. 2-4,6 and 9 EStG stipulates that the fee for a license exploited in Germany must be taxed in Germany.

Who: Section 50a EStG stipulates that this taxation must be implemented by way of withholding. In other words, the person who pays the license/use fee (hereinafter referred to as the "payment debtor") must deduct the withholding tax and pay it to the Federal Central Tax Office (hereinafter referred to as "BZSt"). 

Licensing fees in general: With respect to licensing fees, withholding tax should generally always be considered when an artist resident abroad receives licensing fees as defined above for the granting of rights of use (e.g. for an existing version of a play or a piece of music already composed, for the permission to stream video recordings or to use photographs).

Licensing fees in the case of mixed contracts
Artists often conclude contracts in which the remuneration is only partially to be classified as licensing fees.

Creative artists

In the case of creative artists, for example, the remuneration paid for the creation of a work is not subject to withholding tax. However, artists are frequently paid not only for the creation of a work – for example, the creation of a stage design, a stage text or a musical composition – but also for the subsequent use of the work (use of the stage design, performance of the text or the musical composition). Thus, the remuneration is paid for a mixed contractual performance – partly for the creation of the work and partly for the transfer of the rights of use. When drafting contracts of this kind, it is advisable to stipulate which part of the fee is for the creation of the work and which part is for the transfer of the rights of use. According to the letter of the Federal Ministry of Finance dated 25 November 2011 (the letter can be found here -only availabe in German), in the absence of such an arrangement, 40 percent is allocated to the personal performance of the creative artist (i.e. the creation of the work) and 60 percent to the exploitation of the rights.

Please note: If the portion attributed to the creative element is very high, this can affect the amount of VAT payable. Due to the reverse charge procedure, the licensees are also responsible for paying the VAT. Remember, the basic VAT rate is 19%, unless an exception applies. In the case of performance contracts, licensing agreements and sales of visual art by the artist, the reduced VAT rate of 7% may apply. However, this exception is generally not applied to artistic service contracts. If, for example, the focus of a directing contract is not the granting of rights but the creation of the work, the applicable VAT rate would be 19% (FG Berlin-Brandenburg, Urteil vom 22.06.2016 - 7 K 7184/14 -only availabe in German). However, the theatre can exempt directors from VAT pursuant to Section 4 No. 20 a UstG. No such exemption is in place for authors and composers. You can find more information on VAT with regard to cross-border transactions here.

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The way in which the tax is calculated depends on whether the contracting parties have agreed on net or gross remuneration. The withholding tax amounts to 15.825% of the gross fee or 18.80% of the net fee.
Note: According to preliminary findings, the increase in the exemption limits for the solidarity surcharge from 2021 will not affect the amount of withholding tax payable. The provisions of Section 50a EStG remain unaffected by the new solidarity surcharge regulations.

Here are some examples of net and gross compensation:

Gross agreement (income tax + solidarity tax: 15.825% of the gross fee)

Sample contractual phrasing regarding the gross fee: The fee specified above is the gross fee. The artist will invoice the gross amount (EUR 10,000.00). The organizer will withhold tax in the amount of 15.825% (EUR 1,582.50) from the fee specified above in accordance with Sections 49ff. EStG and will declare and pay this tax to the BZSt. Only the remaining amount of EUR 8,417.50 will be paid to the artist.
 

Net agreement (income tax + solidarity tax: 18.80% of the net fee)

Sample contractual phrasing regarding the net fee: The fee of EUR 10,000.00 specified above is the net fee (payment amount). The artist will invoice the net amount. The organizer will declare the tax in the amount of EUR 1,880.00 (18.80% of the net fee) to the BZSt in due time in accordance with Sections 49ff. EStG and pay it to the BZSt in addition to the fee paid to the artist.

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The taxable base for calculating the withholding tax is the fee (licensing fee) paid to the artist (licensor).

Travel expenses are not included in the taxable base:: travel and accommodation expenses, provided these do not exceed the actual costs incurred (in accordance with the legal regulations pursuant to Section 50a EStG, the mileage allowance of EUR 0.35 is not part of the taxable base under tax law. In practice, it is sometimes (but not always!) accepted if the allowance is excluded from the taxable base. Legal regulation and practice therefore diverge here to some extent.), Subsistence expenses, which do not exceed the additional meal allowances specified in Section 4 (5) sentence 1 no. 5 EStG.

Special case – taxable base: fee less operating costs (net taxation 30% withholding tax)

If the payment creditor (the artist) is resident in an EU Member State, actual operating expenses and professional expenses can also be excluded from the taxable base (Section 50a (3) sentence 1 EStG, cf. also BFH, Judgement of 27 July 2011 – I R 32/10 – (BStBl 2014 II page 513) and BMF, letter of 17 June 2014 – IV C 3 – S 2303/10/10002: 001 BStBl 2014 I page 887). This only applies if they are directly related to the income that is subject to withholding tax and if the expenses can be verified (e.g. copies of invoices). According to a relevant letter issued by the German Federal Ministry of Finance and dated 25 November 2010, a service has a direct connection to the income if the costs are directly related to the transfer of rights of use in Germany in economic terms such that they cannot be separated from the transfer of rights of use, i.e. they are costs which, according to their origin and purpose, are inextricably linked to the relevant taxable income.
Note: The withholding tax amount changes if the operating costs are directly related to the overall service are excluded from the taxable base: When the operating and professional expenses are taken into account, the withholding tax amounts to 30% of the net income (i.e. after deduction of the directly related operating expenses) if the payment creditor is a natural person. In the case of legal entities or corporations, the withholding tax amounts to 15% of the net income. Calculation example cf. Calculating the tax.

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Profits of foreign shareholders of a GbR (partnership under the German Civil Code) based in Germany

Income in the form of profit distributions (joint income) is also subject to withholding tax. Thus, if a GbR (e.g. a group of artists organised as a GbR) generates income through rights of use and then distributes profits to its partners, the amount paid out to the partner resident abroad is subject to withholding tax. Since the debtor of the payment with respect to the profit distribution is the GbR, the GbR is also obliged to deduct the withholding tax and pay it to the German Federal Central Tax Office.
Example cf. Withholding tax - performances - special case GbR

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Exemption pursuant to Section 50c EStG in conjunction with the DTA

Germany has concluded double taxation agreements (DTAs) with almost all countries in the world. In these agreements, Germany and the respective other country have determined the country in which withholding tax is to be paid in the case of cross-border contracts. In some cases, the regulations in the DTAs are more favourable than those of Section 50a EStG, e.g. the fact that, contrary to the provisions of Section 50a EStG, no withholding tax is levied in Germany.

With regard to licensing fees, the DTAs often assign the taxation right with regard to licensing fees to the country in which the licensor (i.e. the payment creditor) is domiciled or provide for lower taxation in Germany. Accordingly, the regulations of the DTA are more favourable than those of Section 50a EStG in this case. An exemption is therefore possible in many cases.

An overview of the German right to tax licensing fees under the DTAs can be found here (only available in German): The tax rate is based on the “Reststeuersatzliste” (residual tax rate list - Excel document, only available in German).

Note: No solidarity surcharge is applied when licensing fees are residually taxed. If Germany has a taxation right of 5% under the provisions of a DTA (for example DTA-Australia) (cf. Article 12 (1) DTA-Australia), only this 5% must be paid (without any additional solidarity surcharge).

Procedure

Taxation in Germany is not necessary if an exemption is granted or if the reporting procedure or simplified procedure is used.

Exemption/refund
Exemption from withholding tax (i.e. German tax deduction) is implemented either through reimbursement of the tax amounts already paid (refund procedure) or by obtaining an exemption certificate (exemption procedure) prior to payment of the remuneration to the payment creditor.

Simplified procedure from 1 January 2022
In addition, under certain conditions, it is possible to participate in the simplified procedure pursuant to Section 50c (2) No. 2 EStG. Application of the simplified procedure is only possible up to an exemption threshold of EUR 10,000.00, provided that the applicable DTA does not provide for taxation in Germany or provides for lower taxation in Germany. This means that the fee paid to the same artist (subject to limited taxation) by the payment debtor may not exceed EUR 10,000.00 per calendar year (exemption threshold applies from 31 Dezember 2023, before EUR 5,000.00).

The simplified procedure replaces the recording procedure and can be applied from 1 January 2022.

You can find more details on the various procedures and the related requirements here:
Exemption procedure
Simplified procedure
Refund procedure

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In some cases, foreign artists who receive remuneration in Germany for the exploitation of copyrights and ancillary copyrights (hereinafter referred to as licenses) can be exempted from the tax burden of the withholding tax pursuant to Section 50c (1) EStG, if the respective DTA provides for this. This can be granted either by way of an exemption (exemption procedure) or by way of a refund of the tax already paid (refund procedure).

In the case of the exemption procedure, the artist is exempt from the obligation to pay withholding tax pursuant to Section 50c (2) No. 1 EStG from the outset, provided that they have submitted an application for exemption to the BZSt and received an exemption certificate. This means that the payment debtors do not need to withhold and pay the withholding tax when paying the remuneration, but instead pay the remuneration to the artists without any tax being deducted.

In the case of the refund procedure, taxes that have already been declared and paid are refunded to the artist by the BZSt following submission of a refund application to the BZSt.

The procedure followed (where a DTA provides for such a release from tax obligation) depends on when the exemption is applied for.

Prior to payment of the remuneration:

If the remuneration for the rights of use has not yet been paid to the artist, the foreign artist has the possibility to obtain a full or partial exemption from the withholding tax by requesting an exemption certificate using the exemption procedure pursuant to Section 50c (2) No. 1 EStG. If the payment debtor (i.e. the organiser) has been provided with such a certificate prior to making the payment, they either do not need to deduct any taxes at all or only need to deduct tax at a lower tax rate and the remuneration is paid to the artist without deduction or less the lower deduction.
As a rule, the organisers (i.e. the payment debtors) must obtain the necessary authorisation for this procedure and submit the application for an exemption certificate on behalf of the artists, as it is much more difficult for an artist to apply for such a refund from abroad.

After payment of the remuneration

If the licensing fee has already been paid to the artist without an exemption application having been submitted, the payment debtor must deduct and pay the withholding tax on the licensing fee. In this case, the artist can only recover the tax using the refund procedure.

In principle, the exemption procedure is more convenient, since it is not necessary to first pay the tax and then have it refunded. However, artists often only find out after the fact that the relevant DTA provides for an exemption, in which case only the refund procedure is applicable.

In addition, funds must sometimes be transferred within a certain period for reasons of subsidy law. If the exemption notice has not arrived by the end of the project period, the tax must be paid to the BZSt and can only be "reclaimed" through the refund procedure.

This section deals with the exemption procedure for licensing fees (rights of use), pursuant to Section 50c (2) No. 1 EStG, i.e. the situation in which an exemption is possible under a DTA (more info here) and the performer wishes to be exempt from withholding tax prior to the payment of the licensing fee, so that the licensing fee may be paid out without the deduction of withholding tax by the payment debtor.

In the following, we would like to guide you through this exemption procedure. You will find an explanation of each step/requirement and the relevant timelines as well as a list of documents you need to submit the application to the BZSt.

Timing (!)

An exemption from the deduction of tax by the payment debtor is only possible if the payment debtor is in possession of an exemption certificate at the time of payment.
However, an exemption certificate for full or partial exemption from tax deduction pursuant to Section 50a (1) EStG is only issued upon application to the BZSt as part of the exemption procedure. The exemption procedure takes an average of three months to complete (pursuant to Section 50c (2) Sentence 6 EStG, the BZSt is obliged to make a decision within three months of the submission of all required application documents).
The period of validity of an exemption certificate (if the application is approved) generally begins on the date the application is received by the BZSt and extends for up to 3 years (Section 50c (2) Sentence 4 EStG).
As exemption certificates cannot be issued retroactively, the application should be submitted in good time before the start of the requested exemption period, keeping in mind the possible processing time of approximately three months.
If the exemption certificate takes too long to issue (i.e. the application is still being processed), the recommendation is to pay the remuneration less the withholding tax and then file a refund application pursuant to Section 50c (3) EStG despite the fact that an exemption certificate has been requested (you can find more information on the refund procedure here: 07_Guide_TA_Refund procedure_Licenses). Then, the taxes deducted and paid can be recovered immediately through the refund application. This means that you should "switch" to the refund procedure even though the exemption application is still being processed. Otherwise, in addition to the statute of limitations for tax returns expiring (Sections 169 ff. AO), there is also a risk of the statute of limitations expiring (cf. BFH, judgement dated 25 April 2018, I R 59/15, BStBl. II 2018, 624).

If you have sufficient time to opt for the exemption procedure, you will need the documents specified below to complete the process.

Completion of the exemption application form

The exemption certificate will only be issued upon receipt of a written application via the BZSt online portal (BOP). You can find the application here: Application for discharge (refund/exemption) from German tax deduction pursuant to sec. 50c ITA (including but not limited to licenses, artists, athletes).

The BZSt provides a step-by-step guide for the application (only available in German).

The application is used for both the refund and exemption procedures. Please leave the sections concerning the refund procedure blank. In addition, please check only the exemption/refund reason that applies to you (information on the exemption options here).

Residence certificate on the application template

At the very bottom of the aforementioned application template you will find the section entitled "Bestätigung der Steuerbehörde des Wohnsitzes des Antragsstellers" (confirmation of the competent tax authority in the applicant's country of residence), also known as "Ansässigkeitsbescheinigung" (certificate of residence). Please leave this part of the application blank, as it must be submitted to and signed/stamped by the competent tax authority in the applicant's (i.e. the artist's) country of residence. It is used to ensure that artists are actually resident abroad and do not wrongfully receive a tax refund. However, it is important that the confirmation is included on the application, which is sent to the BZSt once completed. You should therefore first fill out the application and then send the original to the tax authority in your country of residence. This tax authority must then complete the certificate of residence section and return the original form to you (or to the artist, who will then forward it to you).

Exceptions with regard to the residence certificate on the application template

France: In practice, French tax authorities regularly refuse to complete the certificate of residence on German applications, and instead issue their own "attestation fiscale". The BZSt is aware of this and states that it accepts the attestation fiscale 99.9% of the time.

United States of America: An exception regarding the certificate of residence on the application template also applies to applicants from the United States of America – in these cases, the separate IRS "Form 6166" is sufficient.
The Internal Revenue Service (IRS) in Philadelphia, PA is centrally responsible for issuing "Form 6166". Information about the issuance of the certificate of residence is provided by the Internal Revenue Service (IRS) on its website.

Authorisation

Strictly speaking, only the artist can file an exemption application. However, they may authorise a third party, e.g. the agency or the payment debtor to carry out procedural actions. You can find the authorisation form here: authorisation form

The original authorisation document must be attached to the application.

Special case documents: company

If the payment creditor is part of a company, the anti-abuse regulation pursuant to Section 50 d (3) EStG applies. Under this regulation, the payment creditor (applicant) is obliged to attach additional documents to the application for review. The purpose of this regulation is to prevent abuse of the tax refund procedure. It serves to ensure that the corporation is not being used solely to establish cross-border income and thus to obtain the tax refund. 

First of all, it must be determined whether the applicant is a company as defined in Section 50 d (3) EStG. It can usually be assumed that this is the case if the applicant is a legal entity or a legal body treated as a legal entity for tax purposes (cf. also Art. 3 (1) (B) OECD Model Tax Convention and letter of the German Federal Ministry of Finance dated 24 January 2012 -only available in German).

The following documents must also be enclosed with the application if you meet the criteria to be deemed a company as defined in Section 50 d (3) EStG:

• Excerpt from the commercial register
• Organisation chart (with details of the shareholding percentages)
  • The BZSt is not very forthcoming with regard to the specific requirements for this organisation chart and does not provide any kind of template to be used. The organisation chart should give an overview of the ownership structure of the company by way of a graphical representation. A sketch/mind map is sufficient.
• Balance sheet and profit and loss account for the relevant business year.

Whether the documents (in particular the organisation chart) are sufficient for the review depends on the individual case and the specific situation as well as the responsible administrator at the BZSt. As a general rule, the documents should be presented as neatly and accurately as possible. However, it is not the end of the world if the documents are not sufficient, as the BZSt will contact you during the review and request any missing documents.

Copy of contract

A copy of the (licensing) contract concluded between the artist and the payment debtor must also be submitted.

Please note: Even if you are in possession of an exemption certificate and the payment debtor therefore does not have to deduct and pay the withholding tax, this does not mean that they do not have to declare the tax (known as a nil return). You can find more information on the registration and withholding procedures here.

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For payments that do not exceed a certain threshold, the law provides for a simplified withholding tax exemption procedure under certain conditions. Similarly to the exemption procedure, the simplified procedure offers the option to forego the deduction of withholding tax (i.e. payment of tax pursuant to Section 50a EStG) in certain cases. However, unlike in the exemption procedure, the payment creditor based abroad (the artist) does not have an active part to play in the simplified procedure. This means that there is

• neither the need for the tax authority responsible for the payment creditor to confirm the application for exemption with regard to the residency abroad
• nor the need for the payment creditor to grant authorisation.
   

In fact, under certain conditions (see below for more information), the payment debtor can omit the tax withholding for certain payments or pay less tax (at a lower tax rate). The procedure is therefore much less time-consuming for the payment debtor and also less complicated than the exemption procedure, as the payment debtor is able to do everything themselves.

When can the exemption threshold procedure be used?

Payments for licenses/rights of use
Pursuant to Section 50c (2) Sentence 1 No. 2 EStG, the income must be income as defined in Section 50a (1) Sentence 3 No. 3 EStG. The regulation therefore only applies to payments for licenses/rights of use. The exemption threshold procedure is not applicable in the case of performances by artists. The reason for this is that the payment debtor reviews the conditions for tax deduction when applying the exemption threshold procedure and either does not deduct the withholding tax or pays the lower tax rate without involvement of another authority. This case-by-case examination of the conditions for exemption is less complex in the case of licensing fees than in the case of payment for artistic performances. As it is hardly reasonable for the payment debtor to perform a legal and factual examination of individual exemption options for artistic performances, the exemption threshold regulation does not apply here.

Exemption in accordance with a DTA
As with the "regular" exemption procedure, the respective DTA must, of course, also provide for a partial or complete exemption for the licensing fee payment (only available in German) in the case of the exemption threshold procedure (more information on the exemption requirements for licensing fees here).

Exemption threshold EUR 10,000
The simplified procedure can only be applied up to an exemption threshold of EUR 10,000. This means that the fee(s) paid to the same artist (subject to limited taxation) by the payment debtor may not exceed EUR 10,000 per calendar year (exemption threshold applies for fees from 31 December 2023, before EUR 5,000).

Please note: The old regulation (recording procedure), which provided for an exemption threshold of EUR 5,500 per individual payment (per contract) per payment debtor and up to EUR 40,000 per artist per calendar year (i.e. several contracts with different clients) no longer applies.

Please note: This regulation only applies up to a total remuneration of EUR 5,000 per artist and calendar year (for fees from 31 December 2023 the exemption threshold is EUR 10,000!). As soon as the remuneration plus any payments already received by the artist from the payment debtor in the same calendar year exceeds EUR 5,000, tax may have to be deducted retroactively for the entire amount (including for the first payment of less than EUR 5,000), as the amount is an exemption threshold, not a tax-free allowance.

Please note – taxable base:

The above examples involve payments for rights of use. This means that the entire fee is subject to the deduction of tax and 100% of it is the taxable base for calculating withholding tax. Consequently, all fees paid are to be taken into account at 100% for calculating the exemption threshold. The situation would be different if, in the above example, a stage designer were remunerated for the creation of and granting of rights to a stage set (mixed services). In the absence of a separate contractual agreement, it is assumed in such a case that 60% of the fee is attributable to the rights of use (granting of rights of use to the stage design) and 40% to the creation of the work (creation of the stage design). This means that when determining whether the exemption threshold is exceeded, only 60% of the fees would have to be taken into account and added together, since only 60% of the fees are attributed to rights of use and therefore constitute the taxable base for calculating the withholding tax. In the modified example (remuneration for mixed services), the following amount would therefore be relevant with regard to the exemption threshold: 60% of the first payment in September (EUR 2,000) = EUR 1,200 + 60% of the second payment in October (EUR 3,000) = EUR 1,800 + 60% of the third payment in December (EUR 2,000) = EUR 1,200, i.e. a total fee for usage rights of EUR 4,200 in 2021. Since only 60% is relevant for the exemption threshold in the modified example, the threshold is not exceeded in this case.

Please note: If the payment for usage rights to an artist abroad exceeds EUR 10,000 or if it is expected that the payments will exceed EUR 10,000 per contractual partner per calendar year (exemption threshold applies to fees from 31 December 2023, before EUR 5,000), the "regular" exemption procedure can be used (instead of the refund procedure) if the fee has not yet been paid out.

What steps do I have to take when applying the exemption threshold regulation?

Case-by-case examination
The exemption threshold regulation may only be applied if all of the above requirements are met. The payment debtor must thus carefully check whether the above conditions are met, i.e. whether the payments are for rights of use/licenses, whether the exemption threshold of EUR 10,000 has been exceeded, and whether the relevant DTA provides for a complete or partial exemption from the deduction of tax pursuant to section 50a (1) No. 3 EStG. The "Reststeuersatzliste" (residual tax rate list) can be used for this check.

Note: No solidarity surcharge is applied when licensing fees are residually taxed. If Germany has a taxation right of 5% under the provisions of a DTA (for example DTA-Australia) (cf. Article 12 (1) DTA-Australia), only this 5% must be paid (without any additional solidarity surcharge).

You can find the list of DTAs here (only available in German).
The "Reststeuersatzliste" (residual tax rate list) can be found here (only available in German).

Other obligations

Tax return/nil return
As indicated above, the exemption threshold regulation simplifies the exemption procedure. However, the other requirements remain the same. Since, just as in the exemption procedure, the tax pursuant to Section 50a (1) No. 3 EStG is in fact due for the respective payment (because foreign income has been received), it must be declared properly (as in the case of the regular tax withholding procedure pursuant to Section 50a EStG).

This means that you need a BZSt tax ID even for the simplified procedure (for more information on applying for a BZSt tax ID, see withholding procedure) and are required to file a tax return. If the conditions for the exemption threshold regulation are fulfilled and the respective DTA provides for a complete exemption from withholding tax, the tax return amount is 0 (also referred to as a nil return). If the respective DTA provides for a reduced tax rate (see also "Reststeuersatzliste" (residual tax rate list)), a return with the lower tax rate must be filed and the tax at the lower tax rate accrued in a calendar quarter must be paid to the Federal Central Tax Office by the 10th of the month following the respective calendar quarter (for details on the individual tax return steps (or nil return, if applicable) and payment of the tax, see withholding procedure).

This article deals with the refund procedure, i.e. with the following scenarios:

• The remuneration has already been paid to the artist; the withholding tax pursuant to Section 50a EStG has been/will be withheld and paid.
• The exemption was requested prior to the date of the event/performance (more details on the exemption procedure here), but withholding tax was deducted because the exemption certificate is/was not available at the time the remuneration is/was paid.

Please note: If the tax should already have been paid but has not yet been paid, the process must be completed properly in order to be able to claim the tax back through the refund procedure (even if the remuneration has already been paid to the artist). Exemptions cannot be granted retroactively (you can find more information on the exemption procedure here). Therefore, even if you think you can get the tax refunded, you still have to pay it first and then pursue the refund procedure.

The following text is intended to guide you through the refund procedure with the BZSt. You will find an explanation of each step/requirement and the relevant timelines as well as a list of documents you need to submit the application to the BZSt.

Documents required for submitting a refund application to the BZSt

You will need the following documents when applying to the BZSt for a withholding tax refund pursuant to Section 50c (3) EStG:

Artist's authorisation to collect

Strictly speaking, only the artist (payment creditor) can file an application for a withholding tax exemption or refund pursuant to Section 50c (3) EStG. Payment debtors themselves are not entitled to file an application. However, payment creditors may authorize payment debtors to file applications and to perform other procedural acts.

Since it is much easier for the payment debtor to file the application as they will be somewhat more familiar with the German authorities/the German administrative procedure, we recommend that the payment debtor complete the refund procedure by proxy.

You can find the authorisation form here: authorisation to collect

The original authorisation document must be attached to the application.

Copy of contract

A copy of the contract concluded between the artist and the payment debtor must also be submitted.

Tax certificate

The original tax certificate issued by the payment debtor must be enclosed with the refund application, in which the payment debtor certifies that the withholding tax has actually been withheld and paid. Pursuant to Section 50a (5) Sentence 6 EStG, the payment debtor is obliged to certify the required information to the payment creditor who is subject to limited tax liability (i.e. the artist) at the latter's request. You can find the tax certificate template here: Tax certificate template

Application for a refund via the BZSt online portal (BOP)

You can find the application here: Application for discharge (refund/exemption) from German tax deduction pursuant to sec. 50c ITA (including but not limited to licenses, artists, athletes)

The BZSt provides a step-by-step guide for the application (only available in German).

Completion of the application: The application is used for both the refund and exemption procedures. Please leave the sections concerning the exemption procedure blank.
In addition, please check only the exemption/refund reason that applies to you.

Residence certificate on the application template

At the very bottom of the aforementioned application template you will find the section entitled "Bestätigung der Steuerbehörde des Wohnsitzes des Antragsstellers" (confirmation of the competent tax authority in the applicant's country of residence), also known as "Ansässigkeitsbescheinigung" (certificate of residence).
Please leave this part of the application blank, as it must be submitted to and signed/stamped by the tax authority in the applicant's country of residence. It is used to ensure that artists are actually resident abroad and do not wrongfully receive a tax refund. However, it is important that the confirmation is included on the application, which is sent to the BZSt once completed. You should therefore first fill out the application pursuant to Section 3.4.1 and then send the original to the tax authority in your country of residence. This tax authority must then complete the certificate of residence section and return the original form to you.

Exceptions

France: In practice, French tax authorities regularly refuse to complete the certificate of residence on German applications, and instead issue their own "attestation fiscale". The BZSt is aware of this and states that it accepts the attestation fiscale 99.9% of the time.

United States of America: An exception applies to applicants from the United States of America – in these cases, the separate IRS "Form 6166" is sufficient.
Please note: The Internal Revenue Service (IRS) in Philadelphia, PA is centrally responsible for issuing "Form 6166". Information about the issuance of the certificate of residence is provided by the Internal Revenue Service (IRS) on its website.

Authorisation to collect, if necessary

In refund cases where payment is to be made to a person who is not the payment creditor (artist), an original "authorisation to collect" document (i.e. authorisation for the account holder to receive payment on behalf of the artist) issued by the payment creditor is required.

You can find a template here: Authorisation to collect

Special case documents: company ("Gesellschaft")

If the payment creditor is part of a company, the anti-abuse regulation pursuant to Section 50 d (3) EStG applies. Under this regulation, the payment creditor (applicant) is obliged to attach additional documents to the application for review. The purpose of this regulation is to prevent abuse of the tax refund procedure. It serves to ensure that the corporation is not being used solely to establish cross-border income and thus to obtain the tax refund.  
First of all, it must be determined whether the applicant is a company as defined in Section 50 d (3) EStG. It can usually be assumed that this is the case if the applicant is a legal entity or a legal body treated as a legal entity for tax purposes (cf. also Art. 3 (1) (B) OECD Model Tax Convention and letter of the German Federal Ministry of Finance dated 24 January 2012 -only available in German).

The following documents must also be enclosed with the application if you meet the criteria to be deemed a company as defined in Section 50 d (3) EStG:

• Excerpt from the commercial register
• Organisation chart (with details of the shareholding percentages)
  • The BZSt is not very forthcoming with regard to the specific requirements for this organisation chart and does not provide any kind of template to be used. The organisation chart should give an overview of the ownership structure of the company by way of a graphical representation. A sketch/mind map is sufficient.
• Balance sheet and profit and loss account for the relevant business year.

Whether the documents (in particular the organisation chart) are sufficient for the review depends on the individual case and the specific situation as well as the responsible administrator at the BZSt. As a general rule, the documents should be presented as neatly and accurately as possible. However, it is not the end of the world if the documents are not sufficient, as the BZSt will contact you during the review and request any missing documents.

Deadline

The deadline for the application for a refund is four years after the end of the calendar year in which the fees were received; cf. Section 50c (3) EStG.

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