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Germany: Domestic Corporate Taxation

Withholding Taxes

Withholding tax of 25%, plus a 5.5% solidarity surcharge, is generally payable on domestic dividend payments. However, dividend payments made to corporations are usually withholding tax free, while those paid to partnerships are subject to withholding tax on 60% of the dividend payment. Dividends paid to connected corporate companies in EU countries are exempt, subject to a 10% shareholding requirement. Dividend payments made to non-treaty countries are generally subject to 15% withholding tax.

Withholding tax of 25%, plus 5.5% solidarity surcharge, is generally payable on domestic interest payments; however, domestic interest paid on private investments, and interest paid to foreign incorporated companies, is not usually subject to withholding tax. Royalties paid to non-resident corporations are subject to withholding tax of 15%, plus 5.5% solidarity surcharge; for royalties paid to non-resident, non-corporate recipients, the rate is 20% plus 5.5% solidarity surcharge. Domestic royalty payments are not subject to withholding tax.

The EU directive on interest and royalty payments applies to payments made within the EU. In most cases, the withholding tax on dividends, interest and royalties can be offset against the recipient’s tax liability or is wholly or partly refundable.

 

 

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