date | theme
08. November 2019 | For withholding tax on licenses, operating expenses are deductible (this contribution)
17. January 2019 | Withholding tax according to § 50a EStG: Licenses – Artists – Supervisory Boards
31. January 2019 | Withholding tax on licence payments to EU/third-country companies
06. March 2019 | Tax deduction according to § 50a EStG: withholding tax for limited tax liability
According to § 50a EStG, 15% withholding tax is withheld on license fees abroad. Until now, it has not been possible to deduct any operating expenses related to these licence revenues. So this led to a tax on sales instead of profits. However, the ECJ has ruled in the legal case FKP Scorpio Konzertproduktionen GmbH that Germany must allow (sub)licenses to deduct operating expenses. Subsequently, the BFH also confirmed this case law in Germany. The tax administration now also applies these principles to the benefit of the taxable person. Therefore, operating expenses or advertising costs can now also be deducted for licence fees.
License fees abroad: How to avoid 15% withholding tax
In the video we explain different ways to save 15% withholding tax on license payments abroad.
1st principle: withholding tax on licenses according to § 50a (1) no. 3 EStG
If licence fees are paid abroad, the Income Tax Act provides for taxation at source. For this purpose, the so-called withholding tax of 15 % is withheld from the license fee by the license-paying entrepreneur and paid to the tax office. The withholding tax is charged before the licensor receives the license fee.
2nd withholding tax: No legal standardization for the calculation of costs
The tax deduction by means of withholding tax is regulated in § 50a EStG. In addition to licence payments, income from artistic and sporting performances, the exploitation of performances and supervisory board remuneration are determined as the goal of withholding taxation.
The provision provides for the deduction of operating expenses and advertising costs for the following income:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.