Grams Mounts New Tax Challenge

Harald Grams is challenging the changes Germany’s tax laws because he says they still discriminate against foreign artists.

The Bielefeld-based tax expert, who has a track record for mounting successful legal challenges against German taxes and their methods of collection, says finance minister Peer Steinbrueck’s decision to charge visiting artists 40 percent of their net profit – as opposed to 20 percent of gross – is unfair because German companies only have to pay 15 percent in the form of corporation tax.

In June 2003 Grams and Dick Molenaar’s victory in what’s referred to as "the Gerritse case" established the principle that countries that apply a gross withholding tax on artists’ earnings are in breach of Articles 49 and 50 of the EC Treaty.

Although Steinbrueck has published a decree that modified the tax law and gives the foreigner the chance to tax the net and not the gross, Grams says that step is still in breach of the same EU regs regarding the freedom of providing services.

A German act that formed its own corporation, such as a limited company, could get away with paying 15 percent of net profit only, Grams says.