Navigating the Once-Obscure German Nonresident Withholding Tax

GILTI Conscience

In this episode of the “GILTI Conscience” podcast, Kroll directors Ryan Lange and Kerim Keser and Skadden partner Johannes Frey join our hosts Nate Carden and David Farhat to explore the details of the German nonresident IP withholding tax. They discuss taxation questions that are still up in the air, how the rule could affect multinational corporations, the valuation of intellectual property (IP) registration and the best steps to take if you owe taxes under this law.

Originally implemented in 1925, the German nonresident IP withholding tax is coming back into the public eye after years of inactivity. The tax law states that if a foreign resident company has an IP registered in Germany, it may be subject to German nonresident taxation. However, uncertainty remains around authorities’ ruling on the tax, the process for determining tax requirements and to whom the tax applies.

At present, it remains unclear which types of multinationals are affected by this tax law. However, tax experts advise that companies with an IP registered in Germany cover their bases in order to avoid an audit, interest risk, liability risk and even corporate risk. This means companies should disclose their situation to German authorities.

💡 Featured Guests 💡

Name: Ryan Lange

What he does: Ryan is a Director in Kroll’s Chicago Transfer Pricing practice, and he advises clients’ senior management on a variety of issues related to transfer pricing, economics, and valuation. He has over 12 years of experience providing advice to companies spanning all sizes and industries. Ryan is a leader within the Chicago Tax Club and has chaired the international tax committee for the past five years. Additionally, he has co-authored various articles and frequently speaks on transfer pricing topics at both domestic and international conferences.

Organization: Kroll

Connect: LinkedIn

Name: Kerim Keser

What he does: Kerim is a Managing Director in Kroll’s Munich office and leads Kroll German, Swiss, and Austrian transfer pricing activities. He has 15 years of transfer pricing experience in consulting firms and at the Australian Taxation Office. He has extensive experience developing transfer pricing solutions for companies and advising across industries, including automotive, consumer products, pharmaceuticals, technology, and financial services.

Organization: Kroll

Connect: LinkedIn

Name: Johannes Frey

What he does: Johannes is a Partner in Skadden’s tax division. He has a broad transaction-oriented tax practice with an emphasis on corporate restructurings, acquisitions, spin-offs, joint ventures, and transactions involving cross-border tax planning. Johannes is named a leading lawyer in JUVE Wirtschaftskanzleien, Chambers Global, and Chambers Europe. He also was previously named by Wirtschaftswoche as one of the top 25 corporate tax lawyers in Germany and has repeatedly been named by Handelsblatt/Best Lawyers on its list of Germany’s Best Lawyers.

Organization: Skadden

Connect: LinkedIn

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GILTI Conscience is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. Skadden’s tax team is recognized globally for providing clients with creative and innovative solutions to their most pressing transactional, planning, and controversy challenges. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.