- Persons selling software development services from outside Germany to German customers, or acquiring such services in Germany from abroad will need to consider this new guidance on potential withholding tax obligations.
- The guidance addresses changes in German copyright law and for the first time sets forth the official view on when withholding tax obligations will arise in cross-border software development projects involving German principals.
- Taxpayers should assess past and future software development transactions involving German principals for compliance with the guidance, and consider proactively obtaining treaty clearances to ensure no withholding obligations arise.
Source EY
