Withhold, declare and pay income tax for service providers living abroad

If you remunerate services provided by service providers living abroad, under certain circumstances you must withhold, declare and pay income tax or corporation tax on their income.

Domestic income from foreign artists, athletes, licensors and supervisory board members is subject to limited tax liability. The Federal Central Tax Office (BZSt) taxes this income in a tax deduction procedure.

The following are subject to limited tax liability in Germany

• Natural persons if they are neither resident nor ordinarily resident in Germany and they earn German income.
• Corporations, associations of persons and asset pools if they have neither their management nor their registered office in Germany and they earn German income.

Anyone who pays remuneration to service providers with limited tax liability must withhold, declare and pay income tax or corporation tax on the income. As a rule, income from domestic performances consists of appearance fees, honoraria, prize money or remuneration for participation in television shows.

You must pay income tax or corporation tax not only on the remuneration, but also on the income that the performers with limited tax liability earn through the exploitation of the domestic performance in Germany. This includes, for example, income arising from a transfer right.

The transfer of rights, such as copyrights or trademark rights, are also taxable income. Example: If a singer gives you the rights to a song temporarily so that you can use the song in a commercial in Germany, the singer earns income from this. You must withhold and pay income tax on this income. If you pay remuneration for commercial, technical or scientific knowledge and skills to a person or company based abroad, this income is also subject to tax.

Income tax is also levied if a person who does not live in Germany is a member of the supervisory board of a German company and earns income from this activity. If you are the payer of this income, you must also pay income tax here.

You are obliged to withhold income tax or corporation tax from the amount you pay to the foreign service provider and pay this tax to the Federal Central Tax Office. The tax is withheld for the account of the person providing the service.

Amount of income tax or corporation tax:

• • for the account of the person providing the service:
    • 15 percent of the income
    • for remuneration for supervisory board members: 30 percent of the income
  • if you pay the tax:
    • 17.82 percent of the remuneration
    • for supervisory board members: 43.89 percent
  • the solidarity surcharge is always 5.5 percent of the tax deduction

none

You need a tax number from the Federal Central Tax Office (BZSt)

• Appeal
• Action before the Cologne Fiscal Court

You must declare the income tax or corporation tax for income with limited tax liability of service providers living abroad online via the BZSt online portal (BOP). To do this, you must first register. You can then complete and submit the tax declaration online.

Apply for a tax number in writing:

• You will need your own tax number from the BZSt for the tax registration. To do this, go to the BZSt website to access the online application for a new tax number for the tax deduction procedure in accordance with Section 50a EStG.
• Complete the application and print it out.
• Sign the application and send it to the BZSt by post, e-mail or via the BOP.
• The BZSt will then send you your tax number by post.

Registration in the BOP:

• You will need the "Registration for electronic data transmission" application, which you fill in online and send off.
• Follow the instructions in the checklist.

Please note:

• If you already have an ELSTER certificate, you can also use this to log in to the BOP.

Online tax registration after registration:

• Log in online to your user account in the Elster Online Portal (EOP) or BOP.
• Once you have logged in to the EOP, switch to the BOP.
• Register the tax in the BOP using the electronic data sheet provided for this purpose.
• Pay the tax calculated in the online portal by bank transfer.
• Alternatively, you can issue the BZSt with a direct debit mandate. By participating in the SEPA Direct Debit Scheme, you ensure that your payment is received by the BZSt on time.
  • You can find a template for issuing the direct debit mandate on the BZSt website.

Please send the completed declaration of participation in the SEPA Direct Debit Scheme to the BZSt by post or email.

The recipient of the benefit must declare and pay the income tax or corporation tax withheld in a quarter by the 10th of the month following the quarter.

There are no costs.

There are no indications / special features.