All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Germany: Remuneration of non-resident directors



Petra Peitz-Ziemann

Erik Muscheites

The finance ministry appears to have reconsidered its position on the taxation obligation of the remuneration paid to non-resident directors of German companies. Up to now, it has broadly taken the view that the individual was liable to German income tax on his receipt for work performed in Germany on company business, if he could be considered as part of the local company's organisation. The ministry has now redrafted its decree – though the text is not yet final – choosing a different expression to describe the foreign resident director's involvement with local management, integrated as opposed to bound in. Up to now, bound in was generally considered to exclude the foreign resident who held a directorship with the German company purely to enable him to supervise its activities, or to provide a back-up in the interests of keeping the company fully competent under company law in an emergency. The fear now is that the use of the term integrated without further definition may indicate a change in attitude to the effect that a directorship is a formal appointment subject to registration and the holder is therefore automatically part of local management by virtue of the office held.

Fortunately, the ministry's other main criterion continues to be the country in which the executive physically does the work. Thus a day spent abroad on German company business – whether in the director's home office, or in his office at group headquarters – will not generally be seen as a German taxable event, regardless of its relevance to an intra-group management charge. The same would also seem to apply to days spent in third countries, such as on a visit to a major export customer of the German subsidiary. This position follows, of course, from the dependent personal services clause in most of Germany's double tax treaties.

Petra Peitz-Ziemann (

Tel: +49 69 9585 6586

Erik Muscheites (

Tel: +49 69 9585 3628



more across site & bottom lb ros

More from across our site

The Biden administration is about to give $80 billion to the Internal Revenue Service to enhance the tax authority’s enforcement processes and IT systems.
Audi, Porsche, and Kia say their US clients will face higher prices under the Inflation Reduction Act after the legislation axes an important tax credit for electric vehicle production.
This week Brazil’s former President Luiz Inacio Lula da Silva came out in support of uniting Brazil’s consumption taxes into one VAT regime, while the US Senate approved a corporate minimum tax rate.
The Dutch TP decree marks a turn in the Netherlands as the country aligns its tax policies with OECD standards over claims it is a tax haven.
Gorka Echevarria talks to reporter Siqalane Taho about how inflation, e-invoicing and technology are affecting the laser printing firm in a post-COVID world.
Tax directors have called on companies to better secure their data as they generate ever-increasing amounts of information due to greater government scrutiny.
Incoming amendments to the treaty could increase costs on non-resident Indian service providers.
Experts say the proposed minimum tax does not align with the OECD’s pillar two regime and risks other countries pulling out.
The Malawian government has targeted US gemstone miner Columbia Gem House, while Amgen has successfully consolidated two separate tax disputes with the Internal Revenue Service.
ITR's latest quarterly PDF is now live, leading on the rise of tax technology.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree