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HMRC internal manual

Double Taxation Relief Manual

HM Revenue & Customs
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Double Taxation Relief Manual: Guidance by country: Germany, Federal Republic of: Exemption Certificate for Construction Industry Scheme

With effect from 1 January 2002, Germany has in force measures to curb tax avoidance in the construction industry. Since that date, construction companies carrying on business in Germany are subject to a withholding tax of 15%, unless they are in possession of an exemption certificate. United Kingdom companies can apply for an exemption certificate, provided they do not have a permanent establishment in Germany. Broadly, their presence on a particular building site or project in Germany must not exceed 12 months.

To obtain an exemption certificate, the United Kingdom construction company should make an application to the relevant German tax office, which for companies resident in the UK is the Tax Office, Finanzamt Hanover-Nord. There are a number of requirements which must be fulfilled by the company if exemption is to be granted, including providing the German authorities with evidence from the United Kingdom tax authorities that the company is taxed in the United Kingdom. To do this, companies will ask for the certificate to be completed on the German questionnaire (StAb-Bau-Fragebogen (2002)). Since this merely asks for confirmation that the company is registered for tax purposes in the UK, there should normally be no reason why the certificate cannot be completed. The completed form should be returned to the company.

Note: The reference on the form to “income taxes” should be taken as covering both income tax and corporation tax. It is also possible that self-employed individuals may be subject to the withholding tax and thus in need of an exemption certificate. Any such request for certification may be dealt with as for a company.