Extraterritorial Taxation of IP Transactions in Germany: A critical analysis of the statutory requirements in the context of the new circular letter of February 2021

Alexander Haller, Johannes Suttner and Katrin Guggenberger in an article on the Kluwer International Tax Blog.

By publishing the circular letter dated February 11, 2021 regarding the “extraterritorial” taxation of  IP transactions, the German tax authorities (again) confirmed their questionable understanding of the relevant tax law provisions: The mere registration of IP in a German public register may create a sufficient nexus for German taxation! The good news are that the aforementioned circular letter (also) provides some procedural simplifications. Essentially, for royalty payments already made or made until September 30, 2021, the German tax authorities do not require to withhold, pay and declare the taxes if specific substantial and formal requirements are fulfilled. In the article on the famous Kluwer International Tax Blog, WTS experts Alexander Haller, Johannes Suttner and Katrin Guggenberger critically analyze the statutory requirements in the context of the new Circular Letter of the German Federal Ministry of Finance of February 2021.

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