Music licensing and withholding tax: a guide for licensors

We want licensing your music to be straightforward, including getting your royalties to you. Sometimes, however, we are legally required to deduct withholding tax from a licence payment and pay it to the tax authority on your behalf.

This is not a fee or commission, and we do not keep the money. Depending on your circumstances and the relevant tax treaty, you may be able to reduce the deduction, avoid it for future payments, or claim back tax already paid.

This guide explains where to start when your payment comes from one of our German, UK or Polish companies. It covers cross-border royalty payments to non-resident licensors; domestic payments and other types of income may follow different rules.

How withholding tax works

Withholding tax is income tax collected at the point of payment. Where the rules require it, we deduct part of your gross royalty, report it and transfer it to the relevant tax authority. You receive the balance.

For example, if a gross royalty is 1,000 and the applicable withholding rate is 10%, you receive 900 and we pay 100 to the tax authority on your behalf. The rate here is just an illustration, not a rate that applies to every licence.

The tax relates to your royalty income. Our separate legal responsibility is to deduct, report and pay it correctly. We cannot simply waive a required deduction, even if a tax treaty may ultimately entitle you to relief.

Withholding tax is separate from VAT. The VAT treatment of your invoice does not determine whether withholding tax applies.

How can a tax treaty help?

A double taxation treaty between the payer’s country and your country of tax residence may reduce withholding tax, oftentimes to zero. The result depends on the treaty, the rights being licensed and your eligibility. A certificate of tax residence is usually a starting point, but additional information may be needed — for example, confirmation that you are the beneficial owner of the royalty income, rather than simply collecting it for someone else.

There are two main routes:

• Relief at source: the necessary documentation or approval allows us to apply a reduced or zero rate when paying you.
• A refund: if tax has already been deducted and paid, you claim back the amount above the rate you are entitled to.

You may also be able to claim a credit for foreign tax in your home-country tax return. Ask your tax adviser which route applies: a credit is not always available, and tax exceeding the treaty rate may need to be reclaimed in the payer’s country instead. The same tax cannot be recovered twice.

Who handles what?

We handle withholding, reporting, payment to the tax authority and the payer-side supporting documents. You are responsible for establishing your entitlement to relief and making any required application, either yourself or through an authorised tax adviser. We cannot establish your tax residence or personal treaty eligibility for you.

Start with the company named as payer in your licence agreement. Follow the relevant section below. If the payer is unclear, contact your usual Tracks & Fields contact before applying.

Payments from Tracks & Fields Germany

The relevant authority is the Bundeszentralamt für Steuern (BZSt). The usual routes are a certificate of exemption for future payments and a separate refund application for tax already withheld and paid.

Option 1: apply for an exemption for future payments

1. Obtain a certificate of tax residence from your home-country tax authority confirming residence under the relevant treaty.
2. Set up access to the BZSt online portal, unless you or your authorised adviser already have suitable access. Start early: registration is a separate step.
3. Select the application for relief (refund/exemption) from German tax deduction under Section 50c EStG, and request an exemption. Identify our German company as the payer using the details in your agreement.
4. Upload the residence certificate, licence agreement and any other documents requested. Companies may need additional information about their ownership and business activities.
5. When approval arrives, check the payer, income covered, rate and validity dates, we will automatically receive a copy of the exemption.

An exemption certificate can be valid for up to five years, but the dates on your actual certificate govern. It cannot normally start before BZSt received your application. Submitting an application alone does not allow us to stop withholding: we generally need the valid certificate in place when we pay you.

For certain smaller royalty payments, German law also offers a payer-side treaty-relief option without an individual exemption certificate. It has an annual payment limit and other conditions. We can check whether it is available for your payments; please do not assume that a small invoice is automatically exempt.

Option 2: reclaim tax already paid

1. Obtain our tax certificate showing the royalty and the tax withheld and paid.
2. Submit the refund application under Section 50c EStG through the BZSt online portal, with your residence certificate, our tax certificate (a confirmation of the tax withheld and declared, which we issue upon request after declaration deadline), the agreement and the requested payment details.
3. Provide your bank details and respond directly to any BZSt requests for further information.

A future-payment exemption does not automatically refund earlier deductions. Apply for a refund separately where required, including while an exemption application is still pending. In some cases, an approved exemption covering the payment date allows us to correct a withholding return instead; we will check this before any adjustment.

The normal German refund application deadline is four years after the end of the calendar year in which the royalty income was received, and it cannot expire earlier than one year after the tax was paid. Treaty-specific provisions may affect the deadline. Do not wait for an exemption decision if a refund deadline is approaching.

Official guidance and forms

• BZSt: withholding tax relief and current online application route
• BZSt: forms and electronic filing information
• BZSt: exemption and refund FAQs

If a link moves, search for BZSt Section 50c withholding tax relief royalties exemption refund or Freistellungsbescheinigung Erstattung § 50c EStG Lizenzen.

Portal update: BZSt has announced that the new Section 50c relief application will be available exclusively in its new online portal from 7 December 2026. Use the current route linked from the official guidance rather than an old saved application link.

Payments from Tracks & Fields UK

The relevant authority is HM Revenue & Customs (HMRC). To receive payments with reduced or no withholding tax, you need to apply to HMRC for relief under the applicable double taxation treaty. If tax has already been deducted, you can also apply for a repayment.

Apply for relief, a repayment, or both

Use the appropriate HMRC form:

• DT-Individual for individuals.
• DT Company for companies and other eligible concerns.

1. Read the current form notes and check whether HMRC specifies a country-specific form for your country of tax residence.
2. Complete your details and the royalty and payer information, using the UK company details in your licence agreement. Request relief for future payments, repayment of tax already deducted, or both, as appropriate.
3. Obtain certification of your tax residence as required by the form, and submit your application using HMRC’s current instructions.
4. If you are claiming a repayment, keep our tax statement and payment records available to support your claim.
5. Respond directly to any HMRC requests. Once relief is approved, send us a copy of the decision so we can match it to your agreement and check the payments and period covered.

What happens while your application is pending?

Under our payment process, we continue to deduct withholding tax where required until the relevant formal HMRC approval is in place. A pending application or a certificate of tax residence alone does not change how we process your payment.

You are responsible for submitting the application and following up with HMRC, either yourself or through an authorised tax adviser. We provide the payer details and supporting tax documents you need from us, but we do not apply for relief on your behalf.

If tax has already been paid to HMRC, claim any repayment due through HMRC. Approval for future payments does not itself mean that earlier deductions have been refunded, so make sure your application also includes any repayment you wish to claim.

How long does relief last?

Follow the conditions and any validity dates in HMRC’s approval. Tell HMRC and us if circumstances affecting your eligibility change, and arrange any renewal needed before the approval expires.

Start early: you can begin the application before our supporting tax statement is available. Check the current form notes and applicable treaty for repayment deadlines.

If a link moves, search for
HMRC DT Individual royalties or
HMRC DT Company royalties repayment.

Payments from Tracks & Fields Poland

For ordinary royalty payments to unrelated overseas licensors, the main way to obtain treaty relief is to give us the necessary documentation before payment. There is generally no need to obtain a German-style, multi-year exemption certificate from the Polish tax authority.

Option 1: provide residence and eligibility documents before payment

1. Obtain a certificate of tax residence from your home-country tax authority covering the payment date.
2. Send it to us before payment, together with the information needed to identify you as the recipient of the royalty income.
3. Provide any further information needed for our checks, such as a beneficial-ownership declaration or information about your business and entitlement to the income.
4. Once we have verified the conditions, we can apply the treaty rate where permitted. If the documentation is missing or insufficient, we may have to deduct the domestic rate instead.

The normal Polish domestic withholding rate for royalties paid to non-residents is 20%; a treaty may reduce it, sometimes to zero. The certificate supports treaty relief but is not, by itself, a guarantee of exemption.

Keep the documents current. Where a residence certificate does not specify a validity period, Polish rules generally allow its use for 12 months from issue, provided the underlying circumstances have not changed. Tell us about any change and provide a replacement when needed.

Option 2: reclaim tax already paid

For an ordinary royalty payment outside the special pay-and-refund mechanism, a recipient who has borne excess withholding tax generally applies to the competent Polish tax office for a determination and refund of an overpayment. The Polish search term is wniosek o stwierdzenie nadpłaty podatku u źródła.

1. Request our supporting tax information and payment details.
2. Gather your residence certificate covering the payment date, licence agreement, payment evidence, bank details and documents supporting your treaty entitlement.
3. Submit an overpayment application to the competent Polish tax office, explaining the payment, tax withheld, applicable treaty treatment and amount claimed. Your adviser can confirm the competent office, filing method and any registration or translation requirements.

There is no single standard WH refund form for every Polish royalty refund. The ordinary overpayment route is different from the special forms described below. Check your claim deadline promptly rather than waiting for future payments or a new certificate.

Official guidance and forms

• Polish Ministry of Finance: withholding tax, refund routes and special forms — includes information in English.
• Current corporate tax forms, including IFT-2/IFT-2R and WH-WCZ
• Official IFT-2/IFT-2R form downloads — these are payer-issued information forms, not your refund application.

If a link moves, search for podatki.gov.pl WHT withholding tax, wniosek o stwierdzenie nadpłaty podatek u źródła or, for the special mechanism only, WH-WCZ / WH-WPZ.

When will you receive our tax documents?

Tax documents follow our reporting and reconciliation process, so they are not necessarily available on the day we pay your invoice. Our usual document turnaround is:

For example, a payment in May falls in the quarter ending 30 June: German and UK documents would normally be available around mid-August. Our routine Polish annual documents would normally be available around mid-February of the following year.

These are our document-processing estimates, not statutory tax-payment deadlines or tax-authority refund times. They do not mean that we retain tax until the documents are ready.

For Poland, the annual information is normally IFT-2R for companies or IFT-1R for individuals. If you need information earlier, contact us: Polish rules also provide for an on-request IFT-2 or IFT-1, generally within 14 days of the taxpayer’s request. You do not necessarily have to wait for the annual document to start a claim.

You can begin arranging residence documentation or a future-payment exemption before our tax statement is available. A refund claim may require evidence that the tax has actually been paid.

Your getting-started checklist

1. Check which Tracks & Fields company is paying you.
2. Request a certificate of tax residence from your local tax authority.
3. Follow the relevant country section above. For UK and Polish direct relief, send us the supporting documents before payment; for a German exemption, apply to BZSt and share the approved certificate.
4. If tax has already been deducted, obtain our tax documents and check the correct refund route and deadline.
5. Keep copies and diarise any expiry or renewal dates.

We want you to receive the amount you are legally entitled to. Getting the documents ready early gives us the best chance of applying relief from the outset. Your role is to establish your entitlement and make any required claim; ours is to handle the deduction correctly and provide the supporting information from our side.

Last reviewed: 11 November 2026. This guide provides general practical information, not individual tax or legal advice. Eligibility, rates, documents and deadlines depend on the applicable law, treaty and your circumstances. Please check the current official instructions or consult your tax adviser before applying.