Domestic income from foreign artists, athletes, licensors and supervisory board members is subject to limited tax liability. The Federal Central Tax Office (BZSt) taxes this income in a tax deduction procedure.

The following are subject to limited tax liability in Germany

• Natural persons if they are neither resident nor ordinarily resident in Germany and they earn German income.
• Corporations, associations of persons and asset pools if they have neither their management nor their registered office in Germany and they earn German income.

Anyone who pays remuneration to service providers with limited tax liability must withhold, declare and pay income tax or corporation tax on the income. As a rule, income from domestic performances consists of appearance fees, honoraria, prize money or remuneration for participation in television shows.

You must pay income tax or corporation tax not only on the remuneration, but also on the income that the performers with limited tax liability earn through the exploitation of the domestic performance in Germany. This includes, for example, income arising from a transfer right.

The transfer of rights, such as copyrights or trademark rights, are also taxable income. Example: If a singer gives you the rights to a song temporarily so that you can use the song in a commercial in Germany, the singer earns income from this. You must withhold and pay income tax on this income. If you pay remuneration for commercial, technical or scientific knowledge and skills to a person or company based abroad, this income is also subject to tax.

Income tax is also levied if a person who does not live in Germany is a member of the supervisory board of a German company and earns income from this activity. If you are the payer of this income, you must also pay income tax here.

You are obliged to withhold income tax or corporation tax from the amount you pay to the foreign service provider and pay this tax to the Federal Central Tax Office. The tax is withheld for the account of the person providing the service.

Amount of income tax or corporation tax:

• • For the account of the person providing the service:
    • 15 percent of the income
    • for remuneration for supervisory board members: 30 percent of income
  • if you pay the tax:
    • 17.82 percent of the remuneration
    • for supervisory board members: 43.89 percent
  • the solidarity surcharge is always 5.5 percent of the tax deduction