Withholding tax - performance

Self-employed performing artists

The following information applies to self-employed performing artists only.

Occupation: Performing artists are those who stand "in front of the camera" or "on stage", i.e. actors/actresses, dancers, singers, etc.

Taxation of income: Where there is no cross-border income, artists (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 a foreign connection.

Cross-border income: artists based abroad who perform in Germany are in receipt of cross-border income. When working with artists and creative professionals with cross-border income, 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. 2-4,9 EStG stipulates that the fee for a performance must be taxed in Germany.

Who: Section 50a EStG stipulates that this taxation is implemented by way of withholding. In other words, the person who pays the performance 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").

A theatre in Germany invites an artist based in France to Germany for a solo guest performance. She receives a fee of EUR 5,000.00. The theatre in Germany withholds the tax and pays it to the BZSt.

Calculating the tax

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 the BZSt, the increase in the exemption thresholds 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)

Agreed gross fee	€ 10,000.00
15% income tax on the gross fee	€ -1,500.00
5.5% solidarity tax on income tax = 0.825% solidarity tax on gross fee	€ -82.50
Net fee (amount to be paid to the artist)	€ 8,417.50
Total taxes (paid to the BZSt by the payment debtor)	€ 1,582.50

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)

Agreed net fee (amount to be paid to the artist)	€ 10,000.00
17.82% income tax on net fee	€ 1,782.00
0.98% solidarity tax on net fee	€ 98.00
Gross fee	€ 11,880.00
Total taxes (Total amount paid to the BZSt by the payment debtor)	€ 1,880.00

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 (EUR 10,000.00). 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.

Taxable base

The taxable base for calculating the withholding tax is the fee paid to the artist.

The following are not included in the taxable base:

Travel expenses: 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.

A dancer from Denmark is hired by an organiser in Germany for three performances, travelling from Copenhagen to Germany for each of them. As per his contract, he receives a fee of EUR 1,000.00 per performance. He is also reimbursed for the costs incurred for the train tickets from Copenhagen (EUR 180.00 per ticket). Only the performance fees (EUR 3,000.00 in total) are part of the taxable base. The amount paid by the organiser for the six train tickets (EUR 1,080.00) is not included in the taxable base.

The following are included in the taxable base:

Rehearsal fees: rehearsal fees and performance fees are treated as a single payment. The rehearsal fee is therefore included in the taxable base, even if the rehearsals took place abroad. What counts is where the performance took place (Federal Fiscal Court (BFH), Decision of 30 May 2018, I R 62/1; Blümich Wied, 134th edition. 2016, EStG Section 50a Para. 42 and 47.).

An actress from Italy is hired for two performances by an organiser in Germany. Rehearsals are to take place in Italy over a period of two weeks. The actress receives EUR 3,000.00 for each performance and EUR 3,000.00 for the rehearsal period, i.e. a total of EUR 9,000.00. Although the rehearsals take place in Italy (i.e. there is no cross-border income), they are treated as a single service together with the performances, meaning that withholding tax is payable on the total of EUR 9,000.00.

Related services

Caution is advised when it comes to "related services". In the case of income from a performance, it is not only the fee paid for the performance itself that is taxable, but explicitly also all income from services related to the performance (Section 50a (1) No.1 EStG). This may include, for example, income from autograph sessions, advertising contracts, interviews, etc., as well as ancillary technical services such as stage design, lighting, sound engineering, costumes and mediation services (agency, etc.), if they are a part of the overall service. The inclusion of these ancillary services presumes that, based on the existing contractual relationship, they are part of the overall service rendered by the payment creditor and that a total compensation sum is paid for this service.

If these ancillary services are provided by a person other than the performing artist or the person who receives the payment for the performance and if they are agreed in separate contracts between the domestic organiser and the third person, the fees paid for them are not to be included in the taxable base for the withholding tax. This does not apply if performing artists can directly influence the choice and scope of the third party's services. In these cases, the third party is also subject to tax withholding pursuant to Section 50a EStG. The ancillary services must also be attributed to the performing artist if they or a person closely related to them pursuant to Section 1 (2) AStG directly or indirectly hold(s) an interest of at least one quarter in the company providing the ancillary service or if there is an economic dependency between the performing artist and the third party.

A music group based abroad agrees to perform three concerts at a theatre in Germany. A flat rate of EUR 15,000.00 is agreed as the net fee, including the costs for equipment, set-up, etc. In order to save taxes and to pay withholding tax only on the portion of the flat rate that is attributable to the concerts/performances, the theatre asks for separate invoices for the concerts and the equipment. The (flat) fee of EUR 15,000.00 is income from a performance pursuant to Section 50a (1) No. 1 EStG. However, this norm also covers all income that is associated with the performance (the concert performance). This is the case with regard to the equipment. It therefore is subject to tax withholding as a "related service" in the same way as the concerts. Since the total amount of EUR 15,000.00 is subject to tax withholding anyway, it is irrelevant whether separate invoices are issued.

A lighting technician from the Netherlands and a theatre group from the Netherlands each conclude their own agreements with an organiser in Germany. In this case, the lighting technician's income is not related to the artistic performance of the theatre group. The German organiser therefore does not have to withhold tax on the remuneration paid to the lighting technician.

The Finance Court of Berlin-Brandenburg' Judgement of 12 May 2010 on 12 K 3078/05 B and the German Federal Fiscal Court's Judgment of 16 November 2011 – I R 65/10 (only available in German) have once again confirmed this:

The assumption that services can be considered "related services" connected with an artistic performance for the purposes of Section 50a (4) sentence 1 No. 1 EStG requires a personal connection in addition to the material connection. Accordingly, both services must be provided by the same provider; there is no personal connection if the ancillary service (in this case: lighting for theatre productions) is not provided by the artists but instead by a "third party" independent of the artists (in this case: theatre group).

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). 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 activity carried out in Germany in economic terms such that they cannot be separated from this activity, i.e. they are costs which, according to their origin and purpose, are inextricably linked to the relevant taxable income. These may include costs for personnel and technology on site, travel costs or local tax consultancy costs. In this context, only expenses that have already been incurred and can be verified are deductible. However, the deductibility of costs does not depend on whether the costs were incurred in Germany or abroad.

Note: The withholding tax amount changes if the operating costs are directly related to the overall service are excluded from the taxable base (net taxation).
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.

A singer resident in the Netherlands concludes a gross agreement in the amount of EUR 1,500.00 with a concert hall in Germany. In connection with her guest performance, she incurred expenses of EUR 450.00 for the technical equipment and EUR 750.00 for transportation. The taxable base would therefore be EUR 1,500.00 – EUR 450.00 – EUR 750.00 = EUR 300.00. Since the tax rate for net taxation is 30% (plus a 1.65% solidarity surcharge), the withholding tax amount would be 31.65% of EUR 300.00.
In the case of a net agreement, the tax rate would be 43.89% (plus a 2.41% solidarity surcharge). More information on calculating the tax rate for gross and net agreements can be found here (only available in German).

Special case: assessment procedure

EU-based payment creditors (artists/contractors) may, under certain conditions, apply for assessment for income tax for income from artistic performances or from their use (but not for licensing fees) (more details on the assessment procedure can be found here). In other words, they may file their own tax returns in Germany. The advantage of the assessment procedure is that any operating costs incurred in connection with the income can be deducted as operating expenses (Section 4 (4) EStG) or professional expenses (Section 9 EStG) without having to fulfil the strict requirements for deduction from the taxable base under the tax withholding procedure (for net taxation at a higher tax rate, directly related operating costs only, or for gross taxation, travel expenses only) pursuant to 50a EStG.

Special case: GbR

Special case: 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 performances 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.

A theatre in Germany hires a group of artists organised as a GbR and based in Germany for a performance in Germany. The artist group/GbR receives EUR 10,000 for the performance. Two of the partners (A and B) live in Germany and one (C) lives in Austria. After the performance, the GbR distributes the profits to its partners.

There is no cross-border income in the case of A and B, since both live in Germany. Since C lives abroad and the joint income (profit distribution) originates from a performance, all the requirements of 50a EStG are fulfilled. As the debtor of the profit distribution, the GbR must deduct and transfer the withholding tax from the profits distributed to C.

When is it not necessary to pay withholding tax?

Mitigation rule (EUR 250.00)

In accordance with Section 50a EStG, no withholding tax is payable on fees of up to EUR 250.00 (gross fee agreement) per person per performance (per artist in the case of GbR partnerships, per legal entity in the case of liability companies, associations, etc.).

A dancer receives a rehearsal fee of EUR 1,000.00 and a gross payment of EUR 250.00 for each of four agreed performances. Since the fee for the rehearsals and for the performances is considered a single fee, the rehearsal fee (EUR 1,000.00) and the performance fees (4 x EUR 250.00 = EUR 1,000.00) must be added together (EUR 1,000.00 + EUR 1,000.00 = EUR 2,000.00) and divided by the number of performances (four) (EUR 2,000.00/4 = EUR 500). The fee therefore amounts to EUR 500.00 per performance and the mitigation rule does not apply. This means that withholding tax must be paid. On the other hand, any accommodation and travel costs incurred are not part of the taxable base on which the calculations for the mitigation rule are based.

An organizer agrees on a gross fee of EUR 250.00 per performance with an artist. No rehearsal fee will be paid. The organizer also covers the costs of the hotel and the plane ticket for the artist in the amount of EUR 200.00. In this example, no withholding tax must be paid because the fee does not exceed EUR 250.00.

Procedure: The German Federal Central Tax Office must also be notified in the event that a fee of up to EUR 250.00 is paid. This notification is submitted by sending what is known as a nil return to the German Federal Central Tax Office. More details on the individual procedural steps for the nil return can be found here.

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. This means that in some cases, contrary to the provisions of Section 50a EStG, the fee is not taxable in Germany. Most DTAs stipulate that the fee paid for performances is taxable in the country in which the performance takes place (this is often regulated in Art. 17 of the DTAs). Accordingly, the regulations of the DTA are not more favourable than those of Section 50a EStG in this case. Therefore, exemptions cannot be granted to performing artists in most cases, but may be possible given the following constellations.

Subsidies from public funds in the posting country

The performance of artists is funded substantially, predominantly or wholly from public funds in the country of residence. This clause appears in a large number of DTAs, although the individual regulations in the DTAs differ from one another. Sometimes it is sufficient for 1/3 of the costs to be covered by public funding in the country of residence; sometimes the artist group must alternatively or additionally be organised as a non-profit. The following are examples of DTAs that additionally require that the funding (if it does not come from the public sector) must come from a non-profit organisation: Great Britain, Turkey, Cyprus.

Note regarding the DTA between Germany and Poland: In this case, even public funding from within the country in which the performance takes place is sufficient to qualify for exemption under the DTA. If the funds do not originate directly from the public sector, they must come from a non-profit organisation.

Due to the numerous differences in detail, it is always important to check the relevant DTA carefully.

A French theatre collective receives a guest performance grant of EUR 10,000.00 from French public funds for a guest performance in a theatre in Germany. The theatre in Germany pays the French theatre collective EUR 7,000.00 for the guest performance. Pursuant to Section 50d EStG in conjunction with Art. 13b (3) DTA DEU/FRA, an exemption/refund can be applied for with regard to the EUR 7,000.00.

DTA: An overview of the most important DTAs that feature a corresponding regulation can be found in this information sheet (only available in German) under Item 2.3.2.

The designation of cultural exchange usually applies if the governments of the respective countries agree on a cultural exchange.

China and Germany agree on a cultural exchange, which is confirmed as a cultural exchange by the respective embassies. An exemption/refund can be applied for pursuant to Section 50d EStG in conjunction with Art. 17 (3) DTA DE/CHN.

DTA: Bosnia and Herzegovina, China, Kosovo, Montenegro, Netherlands, Serbia, Slovakia, Czech Republic, Vietnam, Bulgaria, Poland, Hungary, among others.

De minimis arrangement in the DTA-USA

Article 17 of the DTA-USA stipulates that the principle of the right of taxation of the performance country (source country principle) does not apply to a performance if the artist's fee in Germany is below USD 20,000.00 in a calendar year (fee = revenue plus refunded travel expenses, transport costs, expenses, etc.). The refund application can only be submitted after the end of the calendar year.

A dancer from the USA travels to Germany for a performance at a theatre and receives a total of EUR 10,000.00 (including travel expenses). The theatre in Germany must pay the withholding tax and can then have it refunded by the German Federal Central Tax Office on behalf of the artist after the end of the calendar year (if authorised by the artist).

Special case – DTA-Belgium: payments to third parties (stage 1); employment (stage 2)

The DTA-Belgium provides for a special exemption option, stipulating that the remuneration paid to third parties (i.e. not to the artist) (stage 1) must not be taxed in the country of performance if the third party has employed the artist and if the artist stays in Germany for less than 183 days in the context of the employment (stage 2). Since the DTA-Belgium provides for the existence of both grounds for exemption (exemption in the case of payment to third parties and exemption in the case of employment), an exemption can be requested if both grounds for exemption (cumulatively) apply with regard to payments to third parties: That is, the payment creditor can apply for an exemption if the payment for the performance is not made to the artist but to a third party AND if the artist is in an employment relationship with that third party.

Since this exemption option is not provided for in the other DTAs, it is only relevant if the artist and the production company are based in Belgium.

(Previously, this exemption option was also included in the DTA-France and therefore also applied to remuneration payments to French artists. However, the DTA-France has been amended in this regard and no longer provides for this special case).

A theatre in Germany hires a production company from Belgium (stage 1), whose artists are employed by the company (stage 2). The theatre does not pay the artists directly, but instead "via" the production company. In a triangular constellation like this, the theatre in Germany requires proof of exemption from withholding tax on the fee to be paid to the Belgian production company at both stages.

Therefore, both stages must be examined:

Stage 1: The DTA between Germany and Belgium provides that an exemption from withholding tax can be requested if the fee is not paid directly to the artists by the organiser but rather to a third party (e.g. the production company). However, the DTA further stipulates that this exemption only applies to stage 1 if the conditions for an exemption are also met at stage 2.

Stage 2: The DTA between Germany and Belgium provides that an exemption from the payment of withholding tax can also be requested in the case of employment if the artist does not stay in Germany for more than 183 days in the course of a calendar year. If the artists employed by the Belgian production company stay in Germany for less than 183 days, the conditions for an exemption are also met at stage 2.

DTA: Germany-Belgium

Employment: additional information on exemption in case of employment here.

The exemption is requested by way of the exemption procedure or the refund procedure. The former is only applicable if the remuneration for the performance has not yet been paid. You can find more details on the respective procedures here:

Exemption procedure: Performance
Refund procedure: Performance

Cultural Orchestra Regulation (Kulturorchestererlass)

Tax waiver pursuant to Section 50 (4) EStG in conjunction with the Cultural Orchestra Regulation (Kulturorchestererlass), provided that no other exemptions apply under the relevant DTA.

If a group of artists from abroad is receiving funding, it must always be determined whether a tax waiver pursuant to Section 50 (4) EStG in conjunction with the Cultural Orchestra Regulation is possible.

Requirements in detail:

Foreign cultural associations (the subject of how many people have to be part of a cultural association is a much-disputed one; definitely no solo artists!).
At least one-third of the funding for the performance must come from domestic or foreign public funds.

Procedure

Who:Foreign cultural associations (or German payment debtors authorized by the cultural association)

Where:Tax office responsible for the payment debtor; in the case of tours, the responsibility for the entire tour lies with the main organiser.

Proof:

Cost schedule showing the public funding for the guest performance. The public funding must be project funding (direct funds). In some cases, the tax offices have even "waved through" institutional funding (indirect funds).
Contracts with the artist group
Proof that the artist group is indeed a group (internet screenshot or the like).

Deadline: By the day of the respective performance.

See also BMF letter of 20 July 1983 on the tax treatment of foreign cultural associations: Cultural Orchestra Regulation (only available in German).

Note I:The Cultural Orchestra Regulation only comes into question if no other exemption reason applies under the DTA; it is therefore subordinate.

Note 2 II:In the case of a tax waiver in conjunction with the Cultural Orchestra Regulation), no tax declaration is necessary, as it is not an exemption under the DTA.

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Difference between exemption and refund

In some cases, foreign artists can be released from the obligation to pay withholding tax pursuant to Section 50c 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

The exemption procedure is only applicable if the remuneration for the fee subject to withholding tax has not yet been paid. The exemption cannot be requested retroactively, meaning that only the refund procedure is applicable in the case of fee payments made in the past.

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.

You can find more information on the exemption procedure here.

After payment of the remuneration

If no exemption has been applied for, the fee cannot be paid without deduction of the tax. Instead, the payment debtor must deduct and pay the withholding tax. In this case, the artist can only recover the tax using the refund procedure.

A theatre in Germany invites an artist based in France to Germany for a solo guest performance on 1 February 2021. She receives a fee of EUR 5,000.00 less withholding tax to be deducted and paid by the theatre. The fee – less the withholding tax (!) – is paid to her on 4 February 2021. On 5 February 2021, the artist discovers that she may be exempt from withholding tax under the relevant DTA.

Only the refund procedure can be applied in this case. This is because the exemption certificate would apply at the earliest from the date of application, i.e. not before 5 February 2021. However, since the remuneration was already paid on 4 February 2021 and a valid exemption certificate was not available, the theatre must withhold the tax, declare it and pay it to the BZSt. The artist's only option now is to request a refund from the BZSt by means of 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.

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Exemption procedure: Performance

This section deals with the exemption procedure for performances (pursuant to Section 50c (2) No.1 EStG), i.e. the situation in which an exemption is possible under a DTA (for more details, see the section on exemptions) and the performer wishes to be exempt from withholding tax prior to the performance and the payment of the remuneration, so that the remuneration 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: 06_Guide_TA_Refund procedure_Performance). 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).

An artist resident abroad is scheduled to perform at a theatre in Germany on 10 May 2021 and will receive a fee of EUR 1,000.00 (less the applicable withholding tax). On 8 May 2021, the artist discovers that he may be exempt from withholding tax under the relevant DTA. He quickly submits an application to the BZSt for an exemption certificate, which is received by the BZSt on 9 May 2021. The artist is paid the remuneration for his performance on 12 May 2021. Due to the processing time, he does not receive the exemption certificate until 10 August 2021.

Since the application was received on 9 May 2021, the exemption certificate is issued as valid from this date. The exemption certificate would therefore be valid at the time the remuneration is paid on 12 May 2021 – three days after the application was submitted.

The only problem in this case would be that the exemption certificate must also be available to the theatre as the payment debtor at the time of payment – on 12 May 2021. While in this case, the artist did indeed submit the application "on time" with regard to the validity of the exemption certificate, he did not take into account the processing period.
In the present case, in the absence of an exemption certificate, the theatre must deduct the withholding tax when paying the artist and transfer it to the BZSt.

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 an 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 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 ("Gesellschaft")

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 (only available in German) dated 24 January 2012).

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.

Exemption reason

The reason for the exemption must be entered in the appropriate section of the exemption application (you can find detailed information on exemption in the case of performances here).
In addition, documentation "proving" the exemption reason must be attached to the application:

Subsidies from public funds in the posting country:

Proof of subsidy from the country of residence
Certificate from the funding authority (this certificate must contain specific information on the scope of the subsidy for the performance)
Budget

Cultural exchange

Certificate from a state institution/diplomatic or consular office of the posting country (BMF of 9 October 2002 – St. II 4 – S.1300-18/02 - only available in German).

Special case Belgium: company through which artists are hired – employment

In the special case (only relevant for DTA-Belgium) when the artist is based in Belgium and the fee is paid to a third party by whom the artist is employed, proof that the money is to be received by a third person (e.g. contract with a production company in Belgium), and a copy of the employment contract concluded with the artists employed must be submitted.

This scenario is only relevant for artists residing in Belgium. The DTA-France used to provide for a similar exemption option, but this DTA has since been amended and no longer offers such an exemption.

Copy of contract

A copy of the 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 details on the registration and withholding procedures here.

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The refund 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). 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 template 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 apploication 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

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 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.

Exceptions

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).

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.

Depending on the reason for exemption according to the respective DTA (detailed information on exemption in the case of performances can be found here), further documents must be attached to the application:

Subsidies from public funds in the posting country:

Proof of subsidy from the country of residence
Certificate from the funding authority (this certificate must contain specific information on the scope of the subsidy for the performance)
Budget

Cultural exchange: certificate from a state institution/diplomatic or consular office of the posting country (BMF of 9 October 2002 – St. II 4 – S.1300-18/02 -only available in German). A certificate from a public institution (or in the case of public funding from the funding authority) or the diplomatic or consular office of the artist's/athlete's country of origin is required to prove that the performance is taking place as part of a cultural exchange.

De minimis arrangement in the DTA-USA: special case "de minimis arrangement" – for the USA only. Artists and athletes resident in the USA who have earned income from performances in Germany can be refunded the tax withheld at the end of the calendar year in question if their fee, including the reimbursement of costs and other benefits, does not exceed USD 20,000. The figure of USD 20,000 refers to the total income of the artist in Germany within one calendar year.
It is sufficient to submit a copy of the contract.

Special case Belgium: company through which artists are hired - employment

This scenario is only relevant for artists residing in Belgium. The DTA Germany-France used to provide for a similar exemption option, but this DTA has since been amended and no longer offers such an exemption.

Deadline

The deadline for an 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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