What does limited and unlimited tax liability mean? Where can I apply for an exemption certificate? The following overview provides answers to these and other tax-related questions. FAQ regarding other subjects can be found here.
Please note: We cannot replace tax advisors and are not permitted to provide any such advice. If you have specific questions or uncertainties regarding VAT liability, please contact your tax advisor or your local tax office.
Pursuant to Art. 50 of the German Income Tax Act, GVL must deduct a reduced tax rate of 15% plus 5.5% solidarity tax from all amounts to be paid out to artists living abroad. If you want to avoid being subject to such a tax deduction, we need you to send us the exemption certificate issued by the Federal Central Tax Office.
Those who neither have their residence nor their habitual abode in Germany are, for the purpose of their domestic income, subject to limited income tax liability pursuant to Art. 49 EStG (German Income Tax Act).
Those with a residence or habitual abode in Germany are subject to unlimited income tax liability pursuant to Art. 1 EStG (German Income Tax Act).
You must submit an application for an exemption certificate according to §50a EStG directly to the Federal Central Tax Office (BZSt). The BZSt online portal (BOP) allows you to transmit data electronically to the Federal Central Tax Office. Since 1 January 2023, only online transmission is possible (see https://www.bzst.de/EN/Businesses/Withholding_taxes/Withholding_Tax_Relief/Forms/forms_node.html). Registration in the BOP portal of the BZSt is necessary for this (https://www.elster.de/bportal/start?locale=en_US).
Please note that we are not allowed to provide any further advice on how to register in the BOP portal (BZSt online portal). Please address any questions regarding this directly to the Federal Central Tax Office or to your tax advisor.
In cases where you do not know your tax number or have other comments on your tax situation, please add a handwritten note on the tax form before sending your documents to us by post.
Since GVL royalties are subject to VAT at a rate of 7%, please check and inform us if you are:
- Are a small business owner. (Does the small business regulation according to §19 UStG apply to you? This is the case if your part-time revenue, e.g. from GVL royalties, did not exceed €22,000 last year and is not expected to exceed €50,000 in the current year), or
- are subjected to sales tax. (Do you issue invoices yourself with sales tax shown or do you make sales tax reports to the tax office?)
If this is the case, please inform us as soon as possible of your correct VAT number, as this is decisive for the payment of future distributions. You can find this information, for example, on your last sales tax notice. Alternatively, you can also provide us with your VAT ID. In Germany, this is represented as follows: DE+9 digits.
If you have any questions or are unsure about your VAT liability, please contact your local tax office.
Please note that we cannot make any payments of outstanding remuneration to you until your VAT liability has been finally determined.
There are two different types of remuneration (For each of the two types of remuneration you will receive a payment notice). Your first type of remuneration (that of acquiescence) is subject to the reduced 7% sales tax. For your second type of remuneration (payments of the type "remuneration private copying and rental & lending" - these are also called remunerations for collection services), no VAT is due on your remuneration. However, the remuneration for collection services incurs costs, which we offset against your payment. These costs are charged with 19% sales tax. Therefore, the amount for your remuneration from collection services is reduced by both the collection expenses and the proportional 19% sales tax on the collection expenses.
You are a small business owner if the small business regulation according to
19 UStG applies to you. This is the case if your part-time revenue, e.g. from GVL royalties, did not exceed €22,000 last year and is not expected to exceed €50,000 in the current year.
If you are subject to VAT, you will automatically no longer be listed as a small business. This is the case if you issue invoices with sales tax stated or if you have to report sales taxes to the tax office.
If this is the case, please inform us as soon as possible of your correct VAT number, as this is decisive for the payment of future distributions. You will find this information, for example, on your last sales tax assessment notice. Alternatively, you can also provide us with your VAT ID. In Germany, this is represented as follows: DE+9 digits.
If you have any questions or are uncertain about your VAT obligations, please contact your local tax office.
Please inform us of your turnover tax number or ID in writing and tell us when your liability to pay turnover tax started. We will arrange for any additional turnover tax payments.
There is no tax deduction on collection costs.
You will be subject to a tax deduction on collection costs.
Detailed reports include, in short, your entitlements which are projected for a specific usage year. Said projected total amount shows how much remuneration you are expected to receive at the end of the notification period. (The total amount is constantly updated. Usually it is adjusted upwards because successive reserves are dissolved, but sometimes downwards if, e.g. we unexpectedly receive more contribution notifications than anticipated.)
The distribution takes place in several stages due to the long statutory notification periods. There is an initial distribution with an initial amount, several subsequent distributions with further partial payments and eventually a final distribution when the notification deadlines expired and the distribution budget can be completely dissolved. You receive your overall entitlement at the end of the distribution cycle. The distributed amounts should, when added up, correspond to the amount shown in the last detailed statement.
The payout notifications you usually receive with a settlement always state the current remuneration entitlement and the amounts already paid out in the meantime (indicating the date of any related older payout notifications). The statements therefore document the progress of the “partial payments” of the advised total amount.
It increases the transparency of the calculation and shows the remuneration categorised into subject to VAT and not subject to VAT.
The amount usually consists of the final amount of both payout notifications. It is possible that you receive separate transfers within a few days.
You will usually receive two payout notices and the total amount, which is the sum of the two documents, should be positive. So you will participate in the distribution even though one of the documents shows a negative payout amount.
Background: The GVL's remuneration comes from the domains "rights transfer" and "private copying and rental/lending". These two areas are reported separately due to different taxation, so you will usually receive two payout notifications. However, your remuneration will be transferred in one sum.
Presumably you have received an advance or a down payment from the GVL in the past. Such advances are usually granted on revenues from the "rights transfer" area and could previously only be offset against revenues from this area.
However, we are now able to offset from both revenue sources. The advantage: Advances are reimbursed more quickly, so you receive remuneration from the GVL again more quickly.
You have probably received an advance or instalment payment from GVL in the past. Such advances are usually granted on revenues from the "rights transfer" area and could previously only be offset against revenues from this area.
However, we are now able to offset the two revenue sources. The advantage: Advances are refunded more quickly, i.e. you receive remuneration from GVL more quickly.
The amounts shown consist of two different portions: The first is GVL's administrative costs, which are a percentage of this remuneration share. The second component is costs that are charged to us. On the basis of Section 44 of the German Collecting Societies Act (VGG), GVL has entered into agreements with various partners regarding the collection of revenues, e.g. the proceeds from private copying and rental & lending. This is taken care of by organizations such as the Central Office for Private Transfer Rights (ZPÜ), the Central Office for Library Royalties (ZBT) or the Central Office for Video Rental (ZVV).
Collection costs must be reported separately and are subject to VAT since a change in the way revenue from private copying is viewed under tax law. This new regulation now makes their offsetting against revenues transparent.
The remuneration itself does not change as a result. Of course, the costs will only be charged proportionately if you actually receive money for the distribution.
The amounts shown consist of two different portions: The first is GVL's administrative costs, which are a percentage of this remuneration share. The second component is costs that are charged to us. On the basis of Section 44 of the German Collecting Societies Act (VGG), GVL has entered into agreements with various partners regarding the collection of revenues, e.g. the proceeds from private copying and rental & lending. This is taken care of by organizations such as the Central Office for Private Transfer Rights (ZPÜ), the Central Office for Library Royalties (ZBT) or the Central Office for Video Rental (ZVV).
Collection costs must be reported separately and are subject to VAT since a change in the way revenue from private copying is viewed under tax law. This new regulation now makes their offsetting against revenues transparent.
The remuneration itself does not change as a result. Of course, the costs will only be charged proportionately if you actually receive money for the distribution.
Collections for rental and lending and private copying are carried out by third-party organisations and paid through to GVL. This creates administration costs. Please click here for more information on this topic.
The exact amounts can always be found here in our annual transparency report.
The costs for GVL's own administrative expenses are based on the actual incurred costs for personnel, IT development, etc. In 2021, the cost rate actually decreased by 1 percent compared to the previous year's level due to increased revenues and was 9.7 percent.
Collection costs are made up of the following subtotals, which are deducted from your revenues on a percentage basis:
- Public reproduction (by GEMA) collection fee of up to 12.5%
- Rental (by GEMA/ZVV) collection fee of 30%
- Rental (by VG Wort/ZBT) collection fee of up to 3%
- Cable retransmission (by ARGE Kabel) collection fee of up to 10%
- Private copying (by ZPÜ) collection fee of up to 5%
In view of the financial bottlenecks that many performers suffer from, we were asked by a large number of rights holders and associations to offset advance payments only moderately against distributions in 2020.
Advances were determined specifically from forecasts for individual distribution years. During the regular distribution process, they are now assigned to the individual distribution years and offset with the corresponding amount, so that a combination of offsetting and payment can easily occur. This may, under certain circumstances, extend the settlement period, but has the desirable advantage that unexpectedly high remuneration in certain years will also be noticeable by rights holders. You will find information about prepayments and the amounts paid and cleared in each case on your payout notifications.
There can be various reasons for this:
- Has your personal master data changed recently? If there has been returned post or bank returns, we cannot carry out a payout. Please contact us to update your data to its current status.
- Have you received any advance payments recently, such as the corona advance? Then the distribution amount was probably fully offset or is now below the minimum limit of EUR 5.00.
- The payout amount is below the minimum limit of EUR 5.00.
- In some cases, the forecast for the value of contributing to a production must be adjusted downwards. Any overpayments that have taken place up to that point must first be offset against the payout amounts.