Relief from tax deducted at source as a result of exemption or refund
Relief for foreign taxpayers from German tax deducted at source is effected either by a refund of the amounts of tax already paid, in accordance with § 50d, paragraph 1 of the [German] Income Tax Act (EStG) or by exemption from the deduction of tax at source prior to payment of remuneration to the creditor (§ 50d, paragraph 2 EStG). The double taxation agreements (DBA) agreed between the Federal Republic of Germany and the other countries constitute the basis for exemption or refund. The application must be made on a form.
Full exemption may be granted to payments of interest and royalties between associated companies in different EU Member States if the application conditions are met, even if the DBA confers a partial right of taxation on the State deducting the tax at source. Under Council Directive 2003/49/EC of 3 June 2003, tax relief is based on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States in conjunction with § 50g EStG. The following list shows which countries have a residual tax rate which may be reduced to 0%. Applicants (associated entrepreneurs) from countries which do not have a residual tax rate may make a normal application for exemption without having to substantiate the specific conditions.
You will find all the information you need on the exemption and/or refund procedure and all the requisite forms in the appropriate sub-menus on the navigation bar on the left-hand side. In addition to the general memorandum from the Federal Central Tax Office (BZSt), the Federal Ministry of Finance has also issued a memorandum on § 50a, paragraph 4 EStG.
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