Withholding tax on income payments from Germany

On February 14, the Council for Economics and Finance of the Federal Republic of Germany updated the list of countries that do not cooperate with the European Union. The Russian Federation was included in this version of the list.

The Council revises this list twice a year – in February and October respectively.

If this list is approved by the Ministry of Finance and the Federal Ministry for Economic Affairs and Climate Protection, additional taxation and withholding measures will be applied for the countries on this list from January 1, 2024 (par. 9 and 10 of the Tax Haven Protection Act).

This means that a withholding tax of 15% will be withheld at source on the following payments to residents from such countries:
  • provision of services to German residents,
  • trading in goods or services with German residents,
  • leasing or selling rights entered in the domestic public register,
  • income from financial relationships with German residents.

A so-called solidarity tax of 5.5% is also added to the withholding tax, resulting in a withholding of 15.825% on the above payments.

If you have income contracts with Germany, we recommend that you analyse the terms and conditions of the wording of prices and payments and amend the contracts accordingly.