Experts Dr. Christian Engelen and Dr. Nils Linnemann from our German member firm, Flick Gocke Schaumburg are hosting a webinar on Withholding Tax on U.S. Inbound Structures – Germany Targets Disregarded Entities on Thursday 26 February, 17:00-18:00 CET.

The USA are one of the most important investors in Germany. Investments are often made through corporations that are held (directly or indirectly) by a US entity. Naturally, such investments are based on the expectation of profit distributions (or license payments) from the investment. This inevitably raises the question of the tax burden associated with withholding taxes on such payments.

While the Germany-US double taxation agreement generally provides for a significant reduction in withholding taxes, there are considerable hurdles to claiming these reliefs: both treaty law and national law provide for comprehensive rules to prevent treaty abuse. This is often complicated by the question of how to file an application in the case of a hybrid payee.

Recently, a new hurdle has emerged based on a surprising and unexpected change in the opinion of the German tax authorities. Specifically, the focus is on structures in which the domestic company making the payment is treated differently in the two countries. This concerns cases in which the German subsidiary is “checked” for US purposes as a “disregarded entity.” In such cases, according to the administrative opinion, a withholding tax refund is categorically ruled out. As a result, US investors and corporations are now faced with a significantly higher tax burden.

As part of the webinar, our experts will present the main structures affected and analyze the arguments put forward by the authorities. In addition, they will highlight the short-term and long-term options available.

Find out more and register here.