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March 25, 2019

German tax authorities confirm that fees for online advertising should not be subject to withholding

In a number of recent German tax audits, tax auditors took the position that cross-border payments for online advertising of German businesses to nonresident internet platform providers should be treated as royalties or payments for the use of know-how by German companies and should thus be subject to a 15.825% German withholding tax (WHT; 18.8% if grossed-up) – see EY Global Tax Alert, German Tax audit trends impacts withholding tax on fees for online advertising, dated 15 February 2019.

The matter was escalated and put on the agenda of the Federal Ministry of Finance (MoF) to issue an official position. According to a 14 March 2019 press release of the Bavarian State Ministry of Finance, the MoF and the finance ministers of all German states concurred, on 14 March 2019, that payments of German companies to foreign service providers for online advertisement should not be subject to withholding taxes. Accordingly, the matter should be resolved.

For additional information with respect to this Alert, please contact the following:

Ernst & Young GmbH, Munich
  • Christian Ehlermann |
  • Katja Nakhai |
Ernst & Young GmbH, Düsseldorf
  • Tino Boller |
Ernst & Young GmbH, Eschborn
  • Carola Wehling |
Ernst & Young LLP, German Tax Desk, New York
  • Tobias Appl |
  • Thomas Eckhardt |
  • Sandro Schwenke |
  • Sunil Malhotra |
  • Lukas Kronen |



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