Wissenswert Withholding tax for the granting of pipeline rights in accordance with § 107 EstG [Income Tax Act]

In the past, the taxation of payments in connection with the granting of pipeline rights on the basis of the distribution scheme for the breakdown of the disbursement amount into tax-free and taxable components repeatedly led to legal and planning uncertainties. Hitherto, there has been no explicit legal regulation, and recourse to the income tax guidelines and the corresponding appendix resulted in a large number of appeals if disputes occurred. The 2018 Annual Tax Act took account of this fact, not least in view of the desired administrative simplification, and introduced a new withholding tax in § 107 EStG. The regulation applies to payments as of 1.1. 2019. It concerns income in connection with the granting of rights to an infrastructure manager in order to use land for the construction and operation of overground or underground pipelines in the public interest. The withholding tax is considered as final or definitive taxation comparable to capital gains and real estate profit tax. This concerns electricity companies, natural gas companies and enterprises subject to the Mineral Raw Materials Act which operate pipelines for the transport of natural gas and oil, as well as district heating companies.

The 10 % withholding tax. For corporations which are taxed in accordance with § 24 para. 7 KStG, the tax to be withheld and paid by the infrastructure company is 10 %.