Digitalisation of the procedure ...
The BZSt is responsible for, among other things, capital gains tax relief for capital gains recipients based in a foreign country. To this end, data is already being collected at the BZSt on “declarations for exemption from withholding tax” that have been issued. From 2024 onwards, it will basically be mandatory to file applications electronically and to retrieve assessment notices electronically as well as to transmit the data electronically for the tax certificates issued for capital gains.
... with a database for capital gains tax
Generally, electronic reporting requirements would expand the withholding procedure for capital gains tax; by centralising the collection of reports at the BZSt the aim is to make it easier to identify arrangements that attempt to circumvent the taxation of dividends. This comes in response to the schemes that became known under the terms cum-ex, cum-cum and cum-fake. The information will be used by the fiscal authority – and in this case, in particular, the special unit set up at the BZSt – for the purpose of analysing and monitoring.
Tougher liability for tax certificates
In the future, issuers of incorrect tax certificates will be held liable for all the information that should be included on a tax certificate. Furthermore, they would also be liable in the event of a faulty transmission of data. The required data will provide important information for uncovering the truth in the case of share transactions that are particularly susceptible to the creation of “constructs” around the dividend record date.
In particular, in the event of incorrect information from the capital gains debtor or by means of a statement from the issuer of the tax certificate to the tax office that the issuer had not got back an incorrect tax certificate, up to now, it had been possible to avoid a liability claim against the issuer of the tax certificate. In future this will cease to apply.
Section 50d EStG will be updated and “divided up“
The intention is to transfer the current provisions under Section 50d EStG – which relate to relief from capital gains tax or from withholding tax for those with restricted tax lia-bility in the case of royalties, or similar, on the basis of the EStG or a DTA – to a (new) Section 50c EStG. There would be no change in the requirement for tax to be withheld for the above-mentioned income.
Two procedures would be available for capital gains tax relief, namely, exemption in the course of the withholding procedure on the basis of an existing exemption certificate, or a refund of the tax that was withheld on the basis of an exemption notice. Remuneration for a debtor of up to € 5,000 annually (e.g., for royalties under a DTA) may be paid out without, or with a reduced tax deduction. The hitherto applicable recording procedure (Kontrollmeldeverfahren) will be abolished.
A certificate of exemption would, in the future, no longer have a retroactive effect. In the future, a certificate of exemption would only be effective from the date of its issue and, moreover, would be valid for a maximum of 3 years. Only creditors of the capital gains may apply at the BZSt for a certificate of exemption.
If the tax has already been paid then relief could only be claimed through a refunding procedure.
Please note: In any case, the debtor has to submit a withholding tax return even if, because of an exemption, no taxes have been withheld and paid.