Withholding Tax on Your Base Margin Earnings

If you your place of residence or business is in a country other than Germany, it may be necessary to deduct tax from a part of your payout. In principle, we are obliged to withhold tax on 60% of your earnings from the base margin at a rate of currently 15% (withholding tax) plus 5.5% solidarity surcharge on the withholding tax. If you are resident in the European Union or in the United States, you may be able to avoid or at least reduce the deduction completely by providing your Tax Identification Number (TIN).

Place of residence or businessin the EU or in the United States?

If your place of residence or business is in the European Union or in the United States, you can benefit from the existing double taxation agreements (DTAs) that Germany has concluded with these countries. For income that is less than 5,500 EUR per month or 40,000 EUR per year, you can use the recording procedure (KMV).

What is KMV?

The recording procedure (KMV) is a simplified procedure for the reduction of or exemption from withholding tax in accordance with ยง 50d para. 5 of the German Income Tax Act (EStG). The simplification consists in the fact that the tax relief is granted without a separate application by you. The Federal Central Tax Office can authorise Spreadshirt to apply the KMV for the tax deduction. This procedure offers the possibility that your earnings will not be taxed in Germany, or - in case it is - only at a lower tax rate. You can find more information about DBA and KMV on the website of the Federal Central Tax Office of Germany.

Do I have to pay withholding tax?

To find out how high the tax deduction for you is, select the situation that applies to you in the menu.

Click on the situation that applies to you:

  • 1.Place of residence or business in Germany
  • 2. Place of residence or business in the EU or the USA
  • 3. Place of residence or business location in a country outside the EU or the USA

1. Place of residence or business in Germany

No tax deduction is made. It is not necessary to specify a tax identification number. Provided that your name and address details are correct, you will receive your earnings in full. However, if your name and address are not entered correctly, we will not be able to make a payout. Check your address data here.

2. Place of residence or business in the European Union or the United States

Name and address data

The indication of your correct name, address and payment data is a prerequisite to receive an invoice. Check your address data here.

Tax deduction

In principle, we have to deduct tax on a part (60%) of your earnings from the base margin. The tax deduction is currently 15% withholding tax plus 5.5% solidarity surcharge on the withholding tax. Spreadshirt will report the withheld tax to the German Federal Central Tax Office and pay it to them.

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On request, Spreadshirt will issue you a tax certificate for the tax deduction made. Upon presentation of this tax certificate, it may be possible to take the withheld tax into account in your personal tax assessment.

Sample calculation

Tax rate for a shop operator with place of residence or business in Belgium

100.00 EUR earnings from the base margin
./. 9.00 EUR (15% withholding tax from 60% of the earnings from the base margin)
./. 0.49 EUR (5.5% solidarity surcharge on withholding tax)
= 90.51 EUR is the amount paid out from the earnings of this base margin

Spreadshirt is obliged to register the tax in the amount of 9.49 EUR with the German Federal Central Tax Office and to pay it to them.

Recording procedure

In addition to your name and address data, you must also provide your correct tax number (TIN). Indicate your tax identification number here.

If we have your valid TIN and if the monthly earnings from 60% of the base margin is less than 5,500 EUR and the annual earnings from 60% of the base margin is less than 40,000 EUR, the application of the recording procedure (KMV) is possible.

If the KMV is applied, your earnings will be paid in full from the basic margin. In some countries, a residual tax rate must be taken into account in this context, so that the earnings from 60% of the base margin decrease by the reduced tax rate. The applicable tax rate results from the double taxation agreement that your place of residence or business has concluded with Germany.

If the earnings from 60% of the base margin exceeds one of the limits, the application of the KMV is no longer possible with the first payment that leads to the excess. From this point on, the tax deduction of 15% of the earnings from 60% of the base margin (withholding tax) plus 5.5% solidarity surcharge on the withholding tax will be withheld.

Certificate of exemption

It is possible to apply for a certificate of exemption from the German Federal Central Tax Office. You can find the application for an exemption certificate on the website of the Federal Central Tax Office of Germany. If a valid exemption certificate is available at the time of payment, no tax will be deducted. In the case of some countries, a residual tax rate must be taken into account in this connection, so that the earnings from 60% of the base margin decrease by a reduced tax rate. The applicable tax rate results from the double taxation agreement that your place of residence or business has concluded with Germany.

In all cases the following applies:

We would like to point out that the German tax authorities may inform the tax authorities of your country of residence or business about the payments to you.

3. Place of residence or business in a country outside the EU or the USA

Name and address data

The indication of your correct name, address and payment data is a prerequisite to receive an invoice. Check your address data here.

Tax deduction

In principle, we have to deduct tax on a part (60%) of your earnings from the base margin. The tax deduction is currently 15% withholding tax plus 5.5% solidarity surcharge on the withholding tax. Spreadshirt will report the withheld tax to the German Federal Central Tax Office and pay it to them.

On request, Spreadshirt will issue you a tax certificate for the tax deduction made. Upon presentation of this tax certificate, it may be possible to take the withheld tax into account in your personal tax assessment.

Sample calculation

Tax rate for a Spreadshop owner with a place of residence or business in Paraguay

100.00 EUR earnings from the base margin
./. 9.00 EUR (15% withholding tax from 60% of earnings from the base margin)
./. 0.49 EUR (5.5% solidarity surcharge on withholding tax)
= 90.51 EUR is the amount paid out from the earnings from the base margin

Spreadshirt is obliged to register the tax in the amount of 9.49 EUR with the German Federal Central Tax Office and to pay it over to it.

Certificate of exemption

If there is a double taxation agreement between your country of residence and Germany, it is possible to apply for a certificate of exemption from the German Federal Central Tax Office. You can find the application for an exemption certificate on the website of the Federal Central Tax Office of Germany. If a valid exemption certificate is available at the time of payment, no tax will be deducted. In some countries, a residual tax rate must be taken into account in this context, so that the earnings from the design price decrease by a reduced tax rate. The applicable tax rate results from the double taxation agreement that your place of residence or business has concluded with Germany.

Please note:The information on this site may not be considered as tax advice or used to support tax positions. Please consult a tax advisor for professional tax advice.

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