Source: BUS Sachsen-Anhalt (Linie6PLus)

(Partial) Apply for exemption from German capital gains tax for foreign corporations

Description

In special cases, foreign recipients (creditors) of capital gains can be relieved in whole or in part by exemption from capital gains tax (KapSt).

An exemption certificate can only be issued to a corporation domiciled abroad that has a direct interest of at least 10 percent in a distributing corporation subject to unlimited taxation.

The exemption from capital gains tax may be excluded in certain cases (e.g. in the case of companies without function or substance). Thus, this regulation is directed against tax arrangements that attempt to achieve relief from capital gains tax by exploiting the advantages of agreements or directives.

You must submit your application for exemption from German withholding tax on capital gains in writing to the Federal Central Tax Office (BZSt).

Requirements

Applications can be submitted:

legal entities domiciled abroad
-  who are subject to taxes on income or profit in their country of residence without being exempt from it, and
-  to which capital gains accrue from domestic corporations subject to unlimited taxation in which they have a direct interest of at least 10 per cent

Which documents are required?

When applying, you must submit:

appropriate power of attorney in the event that the application is made through an authorized representative
Proof of the amount of direct participation in the nominal capital of the affiliated company, for example:
Contracts for the acquisition of the shares or notarized current list of shareholders
Proof of the justification of the investment income, for example:
- Profit Participation Rights Agreement
- Loan agreement

for the processing of the application: 3 months after complete submission of all necessary supporting documents

Applications / forms

Objection
Fiscal court action

Appeal

Forms: yes
Online procedure possible: no
Written form required: yes
Personal appearance required: no

Process flow

You must submit the application for exemption in writing to the Federal Central Tax Office (BZSt), Department St I B 3.

Download the application from the BZSt website. Fill out the application electronically. Print it out and sign it.
The tax authority of the foreign state must confirm the place of residence.
Then send the application and all documents by post to the BZSt office in Bonn.
Your application will be processed and examined by the BZSt.
You will receive a certificate of exemption or a notice of rejection of your application by post.
In the event that an exemption certificate is issued, the distributing corporation (debtor) may refrain from deducting tax in whole or in part from the outset if the exemption certificate is available.