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Withholding Tax in Germany
The German System of withholding taxation
Taxation on the earnings of foreign artists and tour promoters and production companies regularly proceeds in Germany by means of a withholding tax
(for exceptions, see...). The tax is withheld in a lump sum from the artist/production company’s earnings. The amount of this lump sum deduction takes
into account that costs are included in every earning. Deduction of costs from the calculations (with the exception of travel and lodging costs) is
not permitted.
In accordance with the provisions of the law, the German party that owes compensation (e.g. promoter) is obligated to route the amount of tax withheld
to his/her local tax office and provide the artist/tour promoter with written confirmation both of the withholding and the forwarding of the funds to the
tax office.
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In the matter of withholding taxation, the artist/production company is the tax party owing the tax. The domestic promoter is only liable for
the tax. If the German promoter does not fulfil his/her legal obligations, the German Inland Revenue Services can also bring a legal claim against the
foreign party owing the tax (artist/production company).
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