On 20 January 2021, the German Federal Government adopted the draft bill on the modernisation of the relief from withholding taxes and the certification of withholding tax paid (Abzugsteuerentlastungsmodernisierungsgesetz, or AbzStEntModG). The draft bill includes changes to the withholding tax and relief procedure and an adjustment of the German anti-treaty shopping rules. However, the envisaged retroactive abolishment of the German sourcing rules for licenses and intellectual property (IP) sales transactions based on the mere registration of underlying rights in a German register was dropped. The approval of the bill by the German Federal Government is the first step of the legislative process; so further changes of the draft bill may occur and need to be monitored.
