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Schleswig-Holstein

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

Source: Zuständigkeitsfinder Schleswig-Holstein (Linie6PLus)

Service Description

In special cases, foreign recipients (creditors) of investment income can be fully or partially exempted from capital gains tax (KapSt).

An exemption certificate can only be issued to a corporation domiciled abroad that holds at least a 10 percent direct interest in a distributing corporation with unlimited tax liability.

The exemption from capital gains tax may be excluded in certain cases (for example, in the case of dysfunctional or insubstantial companies). This provision is aimed at preventing tax arrangements that attempt to take advantage of treaty or directive benefits in order to obtain relief from capital gains tax.

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


Process flow

You must submit the application for exemption in writing to the Federal Central Tax Office (BZSt), Unit 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 country must confirm residency.
  • Then send the application and all documents by mail to the BZSt office in Bonn.
  • Your application will be processed and checked by the BZSt.
  • You will receive an exemption certificate or a notice of rejection of your application by mail.
  • In the event that an exemption certificate is issued, the distributing corporation (debtor) may omit the tax deduction in whole or in part from the outset if the exemption certificate is available.

Requirements

Applications may be submitted by:

  • legal entities resident abroad
    • who are subject to taxes on income or profits in their country of residence without being exempt from such taxes, and
    • who receive investment income from domestic corporations subject to unlimited taxation in which they hold a direct interest of at least 10 percent
Which documents are required?

When submitting the application, you must submit:

  • appropriate power of attorney in the event that the application is submitted through an authorized representative
  • Proof of the amount of direct participation in the nominal capital of the affiliated company, for example:
  • Contracts on the acquisition of shares or notarized current list of shareholders
  • Proof of the justification of the capital income, for example:
    • Profit participation rights agreement
    • Loan agreement
What are the fees?

none

What deadlines do I have to pay attention to?

Application: The validity of the exemption certificate begins at the earliest on the day on which the application is received by the Federal Central Tax Office (BZSt).

Validity of the exemption certificate: at least 1 to a maximum of 3 years, after which a new application must be submitted

Processing duration
  • for processing the application: 3 months after complete submission of all required evidence
Legal basis
Appeal
  • Appeal
  • Tax court action

Applications / forms
Author
Technically approved by

Federal Ministry of Finance (BMF)

Process flow

You must submit the application for exemption in writing to the Federal Central Tax Office (BZSt), Unit 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 country must confirm residency.
  • Then send the application and all documents by mail to the BZSt office in Bonn.
  • Your application will be processed and checked by the BZSt.
  • You will receive an exemption certificate or a notice of rejection of your application by mail.
  • In the event that an exemption certificate is issued, the distributing corporation (debtor) may omit the tax deduction in whole or in part from the outset if the exemption certificate is available.

Requirements

Applications may be submitted by:

  • legal entities resident abroad
    • who are subject to taxes on income or profits in their country of residence without being exempt from such taxes, and
    • who receive investment income from domestic corporations subject to unlimited taxation in which they hold a direct interest of at least 10 percent

Which documents are required?

When submitting the application, you must submit:

  • appropriate power of attorney in the event that the application is submitted through an authorized representative
  • Proof of the amount of direct participation in the nominal capital of the affiliated company, for example:
  • Contracts on the acquisition of shares or notarized current list of shareholders
  • Proof of the justification of the capital income, for example:
    • Profit participation rights agreement
    • Loan agreement

What are the fees?

none

What deadlines do I have to pay attention to?

Application: The validity of the exemption certificate begins at the earliest on the day on which the application is received by the Federal Central Tax Office (BZSt).

Validity of the exemption certificate: at least 1 to a maximum of 3 years, after which a new application must be submitted

Processing duration

  • for processing the application: 3 months after complete submission of all required evidence

Legal basis

Appeal

  • Appeal
  • Tax court action

Applications / forms

Author

Technically approved by

Federal Ministry of Finance (BMF)

Further information and offers