The finance ministry has decreed that a royalty debtor may not deduct expenses of the EEA royalty creditor from the gross royalty subject to withholding tax unless the expense was incurred solely in respect of the given licence.
The Supreme Tax Court has held that the withholding tax on royalty payments to licensors in other EU states should be on the net amount after deduction of direct costs.
The ECJ has held that the withholding tax on a royalty paid to a corporation in another EU country may not be more than the corporation tax rate applied to the income less the directly related costs.
The Supreme Tax Court has held that the treaty attribution of the royalty income charged by a US partner is to his US business. Accordingly, it is not taxable in Germany as partnership profits.
On 25 January 2017 the German government published a draft bill proposing a restriction of tax relief on royalty payments made to related parties from 2018 onwards.
The finance ministry has accepted as a precedent a Supreme Tax Court ruling that a premium paid to a former employee for an invention during his employment should be taxed as a royalty, rather than as employment remuneration, but insists that employers may only apply the principle if they hold an exemption certificate from their local tax office.
On 25 January 2017 the federal government approved a draft of the Act to Combat Harmful Tax Practices in connection with the Licensing of Rights. The intention is to prevent multinational businesses from transferring their royalty income to countries, which offer such income preferential treatment. Such preferential tax regimes (so-called Licence Boxes, Patent Boxes or IP-Boxes) are considered not to meet the demands of the OECD and G20 BEPS Project. A new provision is to be introduced to the Income Tax Act (ITA) for this purpose; the new provision should be applied to expenses arising after 31 December 2017.
In its sitting on 2 June 2017 the Bundesrat (the Upper House) approved the Act to Combat Harmful Tax Practices in connection with the Licensing of Rights.
The Supreme Tax Court has held that the import value of film DVDs shall include an uplift to the purchase price to reflect royalties payable by the subsequent purchasers on their proceeds from hiring or selling the films. This uplift can be estimated.
The circular dated 11 February 2021 covers royalty payments and capital gains in foreign-to-foreign cases where the German nexus is purely based on a registration of rights in a German public register
Advocate General Kokott is of the view that the Commission erred in deciding that Luxembourg had granted unauthorized state aid to Amazon in the form of tax advantages.
The ECJ has upheld the German disallowance of one-half of the long-term interest expense for trade tax as not conflicting with the Interest and Royalties Directive.
The Supreme Tax Court has accepted the sale of mining rights attaching to a property no longer owned by the seller as the sale of a real estate right to be taxed as a capital gain.
The Supreme Tax Court has upheld the German disallowance of one-half of the long-term interest expense for trade tax as not conflicting with the Interest and Royalties Directive and not infringing the German/Dutch tax treaty prohibition on discrimination.
On 26 February 2019, the ECJ issued its judgements in the joined cases T Denmark and Y Denmark -v- the Danish Ministry of Taxation (C-116/16 and C-117/16) and N Luxembourg 1, X Denamrk A/S, C Danmark I and Z Denmark ApS -v- the Danish Ministry of Taxation ( C115/16. C-118/16, C-119/16 and C-299/16).
