Organizer - foreign artists
May 29, 2014 | 40,00 EUR | answered by StB Patrick Färber
Among other self-employed activities, I am also an event organizer (2 concerts per year). I invite a band represented by a British company (... HOLDINGS LTD) based in London, with whom I have signed a contract for the event. The agreed fee is 65% of the profit - after deducting net costs of technology, venue, etc. - from the (net) ticket sales.
Does the German income tax of 15% apply to the fee in this case? Keywords: Double Taxation Agreement, limited tax liability, etc. Can this tax be avoided because the fee is taxed in the UK?
Do I also have to pay 7% taxes on the fee to the tax office?
Dear inquirer,
Based on your description of the situation, your request can be evaluated as follows:
- By performing in Germany, the band will become subject to limited tax liability according to § 49 EStG.
- According to § 50a para. 1 No. 1 EStG, withholding tax will be deducted for such activities, by you as the organizer. Depending on the variant, § 50a para. 2 EStG applies 15% to the revenue, or § 50a para. 3 sentence 4 No. 2 EStG applies 15% to the net revenue (revenue minus documented expenses) for corporations (in this case, British Ltd.). It does not matter whether the band is represented by a British Ltd. or not, or whether the fee goes to the band or a third party.
- According to Art. 16 DBA, double taxation is resolved by allowing Germany to make the withholding tax deduction, and then the UK credits this tax against the tax payable by the Ltd. in the UK. Therefore, there is no possibility to be exempt from paying the withholding tax.
Regarding value-added tax, the band or Ltd. is the service provider (performance), and you as the organizer are the service recipient. In both scenarios, the place of supply is in Germany, but by another EU entrepreneur who (hopefully) has a VAT ID number. This means the reverse charge procedure applies, so you as the service recipient pay the VAT for the service provider, but at the same time (if all necessary conditions are met) you can claim input tax deduction. In the end, there is no tax burden if you issue a credit note to the band/Ltd., with the amount shown as net, without VAT, and including both VAT ID numbers and a reference to the reverse charge procedure. VAT rate 7% according to § 12 No. 7 a) UStG.
I hope this overview has been helpful.
Sincerely,
Patrick Färber, Tax Advisor
