WRITTEN QUESTION E-0646/99 by Ian White (PSE) to the Commission. Tax on the employment of foreign nationals.
20. 6. 2000 EN Official Journal of the European Communities C 170 E/1 I (Information) EUROPEAN PARLIAMENT WRITTEN QUESTIONS WITH ANSWER (2000/C 170 E/001) WRITTEN QUESTION E-0646/99 by Ian White (PSE) to the Commission (16 March 1999) Subject: Tax on the employment of foreign nationals Is the Commission aware that in the world of German theatre, a tax on the employment of foreign nationals appears to be paid at a rate of 20 %. Can the Commission confirm that this is the case and does it accept that such practice is therefore discriminatory against other EU citizens within the Federal Republic of Germany? Supplementary answer given by Mr Bolkestein on behalf of the Commission (4 October 1999) Non-resident artists are subject to German income tax on their professional income earned in Germany irrespective of whether or not they are also subject to income tax in their Member States of residence (the latter must of course take into account the tax paid in Germany). In order to ensure the payment of tax at all and to facilitate its collection, organisers are bound, by virtue of the (German) Income Tax Act 1997, lastly modified by the Tax Relief Act 1999/2000/2002 of 24 March 1999, to withhold from the fees agreed with non-resident artists, as well as from the related performance and ancillary costs, income tax at a rate of 25 % (15 % before 1996), topped up by the solidarity complement tax as well as by VAT. Such tax deduction corresponds to a taxable profit, at the marginal top rate of at present 53 %, of less than 50 % of the gross fees. In other words, the system assumes deductible expenses of more than 50 %, which appears not to be unrealistically low. Moreover, a reduction of the tax to be withheld can be granted on request to the fiscal authorities, if it is shown that the tax finally to be paid would be lower (paragraph 50a Income Tax Act). This will in particular apply, if expenses are incurred which would normally not be part of the tax base. In any event, an individual tax assessment under the progressive tax rate can be obtained by introducing a tax return. Overpaid taxes will then be reimbursed. However, the 25 % tax withheld is considered to be final, if no action is taken by the non-resident artist. German artists are subject to the same tax, but they always pay it at their individual tax rate according to their income situation as declared in their tax return. The different methods of tax collection are not considered to be discriminatory, because they reflect the different situation of non-resident and resident artists and do not appear to be disproportionate