What is withholding tax?
If your tax domicile is outside Germany, we are obliged under §50c EStG and the double taxation agreement to withhold a so-called withholding tax of just under 16% (incl. solidarity surcharge) from your fee. Germany has a double taxation agreement (DTA) with some countries, which means that these countries do not have to pay any or less tax.
There are therefore three different cases:
1) Germany has a DTA with the country of your tax domicile:
In this case, no additional tax deduction from your fee is necessary in the first instance. However, if you have reached the tax threshold of €10,000 per year or will reach it in the foreseeable future, the full withholding tax rate of 16% will be due. However, you have the option of submitting an exemption application so that you are exempt from this tax for a certain period of time. We explain how to do this further down in this article.
These countries are affected, for example: Austria, Switzerland, Belgium, France, Italy, Spain, Greece, Finland, Croatia, Great Britain, Georgia, Hungary, Ireland, Israel, Iceland, Japan, Liechtenstein, Moldova, Malta, Netherlands, Norway, Russia, Sweden, Turkey, USA, South Africa, Canada
2) Germany has no DTA with the country of your tax domicile:
We are obliged to withhold the full withholding tax rate and solidarity surcharge from your fees and pay it to the Federal Central Tax Office. In concrete terms, this means that we will deduct this tax of 16% directly from your fee and show it accordingly on your credit note.
These countries are affected, for example: Colombia, Chile, El Salvador, Peru, Guatemala, Cameroon
3) Germany has a residual tax agreement with your country of tax residence:
In this case, the full 16% withholding tax is not due, but an agreed residual tax. How high this is depends on the country in question. We are obliged to withhold this residual tax rate from your fees and pay it to the Federal Central Tax Office. Should you earn more than €10,000 per year at eduki in the future, the full withholding tax of 16% would be due from this point onwards (15% withholding tax plus 5.5% solidarity tax, which is credited against the withholding tax). To avoid this, it is possible to submit an exemption order in advance in order to remain at the lower rate of XX%.
These countries are affected, for example: Costa Rica (10%), Mexico (10%), Argentina (15%), Venezuela (5%), Luxembourg (5%), Bulgaria (5%), Romania (3%), Poland (5%), Ukraine (5%), Portugal (10%), Morocco (10%), Lithuania (10%), Sir Lanka (10%), Kazakhstan (10%).
How and when can I apply for exemption?
To be exempt from this tax, you must complete an exemption application electronically via the BOP website. Unfortunately, it can take several months before you receive this exemption, so we would ask you to submit the application as soon as possible. On the following page you will find some documents that can help you to get to grips with the new procedure: https://www.bzst.de/DE/Unternehmen/Abzugsteuern/Abzugsteuerentlastung/Elektronische_Datenuebermittlung/elektronische_datenuebermittlung_node.html
There you will also find a link to the frequently asked questions and a chat bot.
If the exemption is not granted in time, it is also possible to apply for a full or partial refund of the withholding tax paid via the Federal Central Tax Office as soon as it can be proven that you have already paid tax on this income in the country in which you are registered for tax purposes.
For organisational reasons, please let us know as soon as you have submitted your application for exemption.
Guidance for the exemption application process
Unfortunately, the new digital application process is not easy to understand. Unfortunately, we have no way of organising it differently, as it is all prescribed by the authorities. However, we would like to try to provide some guidance here. However, the following instructions are only based on our own understanding and we naturally accept no liability for them.
Step 1: Pre-registration for a BZSt procedure
Step 2: Registration in the BOP
Step 3: Download certificate
Step 4: Login
Step 5: Application
You can find an overview of these steps in the PDF ‘1. checklist registration process BOP.pdf’ For steps 1 to 4, follow the instructions in the following file: ‘2. Step-by-step instructions for registration.pdf’ - note, however, that the first link in the file (under “I. Application for registration with the BZSt”) does not work. Instead, the BZSt number and a BZSt secret should be applied for under the following link:
https://www.bzst.de/SiteGlobals/Kontaktformulare/DE/Abzugsteuer/Elektronische_Datenuebermittlung/kontakt_abzugsteuerentlastung_kmv_node.html
For step 5, please follow the instructions in the file: ‘3rd step-by-step application instructions.pdf’. If you are in the application phase, you are welcome to contact us so that we can send you some instructions for filling out the form as well as the eduki data.
You can find all the files under the following link:
https://www.bzst.de/DE/Unternehmen/Abzugsteuern/Abzugsteuerentlastung/Elektronische_Datenuebermittlung/elektronische_datenuebermittlung_node.html
There you will also find a link to the frequently asked questions and a chat bot.
Why do I have to pay this tax from my fee at all? Can't eduki cover this?
When authors upload materials to the platform, they make a binding offer to conclude a contract to licence the material as an author (‘author contract’). Through this licensing, they receive a portion of the purchase price (the licence fee) each time one of their materials is purchased. As authors are considered licensors, we are obliged under §50c EStG and the double taxation agreement to withhold tax (also known as withholding tax) from their fee. You can find more information on this topic at the following link https://www.bzst.de/DE/Unternehmen/Abzugsteuern/abzugsteuern_node.html