Extension of temporary simplified approach regarding taxation of IP registered in Germany

Please find our original blog post regarding the developments of the taxation of IP registered in Germany here.

Key facts

With its letter of guidance dated 11 February 2021 the Federal Ministry of Finance (FMoF), under very strict circumstances, allowed for a temporary simplified approach regarding the withholding tax on licensing of IP registered in Germany. This simplified approach, until now, only applied if the remuneration is received by 30 September 2021.

With its newest letter of guidance dated 14 July 2021 the FMoF extends the application of this simplified approach to remuneration received until 1 July 2022. The application for the exemption from the withholding tax needs to be filed with the Federal Central Tax Office until 30 June 2022 in all cases.

Practical Implications

Generally, the extension of the simplified approach is to be welcomed. However, the FMoF fails to address the many questions having surfaced with the publication of the letter of guidance in February. This leads to a perpetuation of the uncertainties regarding the taxation of IP registered in Germany.

Dr Marion Frotscher and Simon Bauer