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ARTICLE · 18 FEBRUARY 2019

Withholding Tax On Online Advertising

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According to the current view of the tax authorities, advertising expenditures for the placement of online advertising with foreign providers may be subject to a withholding tax of 15.825 % (incl. solidarity surcharge) on domestic clients.

GermanyTax
Dr. Andreas Rodin
Dr. Andreas Rodin
Nico Fischer
Nico Fischer
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According to the current view of the tax authorities, advertising expenditures for the placement of online advertising with foreign providers may be subject to a withholding tax of 15.825 % (incl. solidarity surcharge) on domestic clients. In the case of a contractual "gross-up", the additional burden on the domestic client amounts to approx. 18.8% of the "net" payments to be made to the foreign provider. Moreover, payments are potentially subject to "the royalty limitation rule" and an add-back for trade tax purposes.

Key Facts

  • In the view of the tax authorities, foreign providers are subject to limited tax liability in Germany due to the provision of online advertising services to domestic clients.

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