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Canada and the Federal Republic of Germany, desiring
to conclude an Agreement for the avoidance of double
taxation with respect to taxes on income and certain oth
er taxes, the prevention of fiscal evasion and the assis
tance in tax matters, have agreed as follows:
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This Agreement shall apply to persons who are residents of
one or both of the Contracting States.
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1. This Agreement shall apply to taxes on income and on
capital imposed by each Contracting State and, in the case of the
Federal Republic of Germany, on behalf of its Laender, political
subdivisions or local authorities, irrespective of the manner in
which they are levied.
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2. There shall be regarded as taxes on income and on capital
all taxes imposed on total income, on total capital, or on elements
of income or of capital, including taxes on gains from the
alienation of movable or immovable property, as well as taxes on
capital appreciation.
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3. The existing taxes to which the Agreement shall apply are:
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(a) in the case of Canada:
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the taxes imposed by the Government of Canada under the
Income Tax Act, (hereinafter referred to as ``Canadian
tax'');
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(b) in the case of the Federal Republic of Germany:
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(aa) the income tax (Einkommensteuer),
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(bb) the corporation tax (K«rperschaftsteuer),
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(cc) the capital tax (Verm«gensteuer),
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(dd) the trade tax (Gewerbesteuer), and
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(ee) the solidarity surcharge (Solidarit«tszuschlag),
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(hereinafter referred to as ``German tax'').
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4. The Agreement shall apply also to any identical or
substantially similar taxes on income and to taxes on capital
which are imposed after the date of signature of the Agreement
in addition to, or in place of, the existing taxes. The competent
authorities of the Contracting States shall notify each other of any
significant changes which have been made to their respective
taxation laws.
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1. For the purposes of this Agreement, unless the context
otherwise requires:
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(a) the term ``Canada'' when used in a geographical sense,
means the territory of Canada, including:
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(aa) any area beyond the territorial sea of Canada which, in
accordance with international law and the laws of Canada,
is an area within which Canada may exercise rights with
respect to the seabed and subsoil and their natural
resources;
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(bb) the sea and airspace above every area referred to in (aa)
in respect of any activity carried on in connection with the
exploration for or the exploitation of the natural resources
referred to therein;
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(b) the term ``Federal Republic of Germany'' when used in a
geographical sense, means the territory of the Federal
Republic of Germany as well as the area of the seabed, its
subsoil and the superjacent water column adjacent to the
territorial sea, wherein the Federal Republic of Germany
exercises sovereign rights and jurisdiction in conformity with
international law and its national legislation for the purpose of
exploring, exploiting, conserving and managing the living
and non-living natural resources;
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(c) the terms ``a Contracting State'' and ``the other Contracting
State'' mean, as the context requires, Canada or the Federal
Republic of Germany;
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(d) the term ``person'' includes an individual and a company;
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(e) the term ``company'' means any body corporate or any
other entity which is treated as a body corporate for tax
purposes;
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(f) the terms ``enterprise of a Contracting State'' and
``enterprise of the other Contracting State'' mean respectively
an enterprise carried on by a resident of a Contracting State
and an enterprise carried on by a resident of the other
Contracting State;
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(g) the term ``national'' means:
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(aa) in respect of Canada, any individual possessing the
nationality of Canada and any legal person, partnership or
association deriving its status as such from the law in force
in Canada;
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(bb) in respect of the Federal Republic of Germany, any
German within the meaning of the Basic Law for the
Federal Republic of Germany and any legal person,
partnership and association deriving its status as such from
the law in force in the Federal Republic of Germany;
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(h) the term ``competent authority'' means:
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(aa) in the case of Canada, the Minister of National
Revenue or the Minister's authorized representative,
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(bb) in the case of the Federal Republic of Germany, the
Federal Minister of Finance or the Minister's delegate;
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(i) the term ``international traffic'' means any voyage of a ship
or aircraft operated by an enterprise of a Contracting State,
except where the principal purpose of the voyage is to
transport passengers or property between places within the
other Contracting State.
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2. As regards the application of the Agreement by a
Contracting State at any time, any term not defined therein shall,
unless the context otherwise requires, have the meaning which it
has at that time under the law of that State concerning the taxes
to which the Agreement applies, any meaning under the
applicable tax laws of that State prevailing over a meaning given
to the term under other laws of that State.
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1. For the purposes of this Agreement, the term ``resident of
a Contracting State'' means:
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(a) any person who, under the laws of that State, is liable to tax
therein by reason of that person's domicile, residence, place of
management or any other criterion of a similar nature;
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(b) that State itself, a ``Land'' or a political subdivision or local
authority thereof or any agency or instrumentality of any such
State, Land, subdivision or authority.
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This term does not, however, include any person who is liable to
tax in that State in respect only of income from sources in that
State or capital situated therein.
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2. Where by reason of the provisions of paragraph l an
individual is a resident of both Contracting States, then the
individual's status shall be determined as follows:
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(a) the individual shall be deemed to be a resident only of the
State in which the individual has a permanent home available;
if the individual has a permanent home available in both
States, the individual shall be deemed to be a resident only of
the State with which the individual's personal and economic
relations are closer (centre of vital interests);
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(b) if the State in which the individual's centre of vital interests
is situated cannot be determined, or if there is not a permanent
home available to the individual in either State, the individual
shall be deemed to be a resident only of the State in which the
individual has an habitual abode;
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(c) if the individual has an habitual abode in both States or in
neither of them, the individual shall be deemed to be a resident
only of the State of which the individual is a national;
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(d) if the individual is a national of both States or of neither of
them, the competent authorities of the Contracting States shall
settle the question by mutual agreement.
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3. Where by reason of the provisions of paragraph 1 a person
other than an individual is a resident of both Contracting States,
the competent authorities of the Contracting States shall by
mutual agreement endeavour to settle its status and to determine
the application of the Agreement. Insofar as no such agreement
has been reached, such person shall be deemed not to be a
resident of either Contracting State for the purposes of enjoying
benefits under the provisions of the Agreement.
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1. For the purposes of this Agreement, the term ``permanent
establishment'' means a fixed place of business through which
the business of an enterprise is wholly or partly carried on.
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2. The term ``permanent establishment'' includes especially:
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(a) a place of management;
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(f) a mine, an oil or gas well, a quarry or any other place of
extraction of natural resources.
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3. A building site or construction or installation project
constitutes a permanent establishment only if it lasts more than
twelve months.
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4. The use of an installation or drilling rig or ship in a
Contracting State to explore for or exploit natural resources
constitutes a permanent establishment if, but only if, such use is
for more than three months in any twelve-month period.
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5. Notwithstanding the preceding provisions of this Article,
the term ``permanent establishment'' shall be deemed not to
include:
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(a) the use of facilities solely for the purpose of storage,
display or delivery of goods or merchandise belonging to the
enterprise;
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(b) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of storage,
display or delivery;
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(c) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of
processing by another enterprise;
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(d) the maintenance of a fixed place of business solely for the
purpose of purchasing goods or merchandise or for collecting
information, for the enterprise;
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(e) the maintenance of a fixed place of business solely for the
purpose of carrying on, for the enterprise, any other activity of
a preparatory or auxiliary character;
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(f) the maintenance of a fixed place of business solely for any
combination of activities mentioned in subparagraphs (a) to
(e) provided that the overall activity of the fixed place of
business resulting from this combination is of a preparatory or
auxiliary character.
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6. Notwithstanding the provisions of paragraphs 1 and 2,
where a person - other than an agent of an independent status
to whom paragraph 7 applies - is acting on behalf of an
enterprise and has, and habitually exercises, in a Contracting
State an authority to conclude contracts on behalf of the
enterprise, that enterprise shall be deemed to have a permanent
establishment in that State in respect of any activities which that
person undertakes for the enterprise, unless the activities of such
person are limited to those mentioned in paragraph 5 which, if
exercised through a fixed place of business, would not make this
fixed place of business a permanent establishment under the
provisions of that paragraph.
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7. An enterprise shall not be deemed to have a permanent
establishment in a Contracting State merely because it carries on
business in that State through a broker, general commission
agent or any other agent of an independent status, provided that
such persons are acting in the ordinary course of their business.
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8. The fact that a company which is a resident of a Contracting
State controls or is controlled by a company which is a resident
of the other Contracting State, or which carries on business in that
other State (whether through a permanent establishment or
otherwise), shall not of itself constitute either company a
permanent establishment of the other.
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1. Income derived by a resident of a Contracting State from
immovable property (including income from agriculture or
forestry) situated in the other Contracting State may be taxed in
that other State.
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2. The term ``immovable property'' shall have the meaning
which it has for the purposes of the relevant taxation law of the
Contracting State in which the property in question is situated.
The term shall in any case include property accessory to
immovable property, livestock and equipment used in
agriculture and forestry, rights to which the provisions of general
law respecting landed property apply, usufruct of immovable
property and rights to variable or fixed payments as
consideration for the working of, or the right to work, mineral
deposits, sources and other natural resources; ships and aircraft
shall not be regarded as immovable property.
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3. The provisions of paragraph 1 shall apply to income derived
from the direct use, letting, or use in any other form of immovable
property and to income from the alienation of such property.
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4. The provisions of paragraphs 1 and 3 shall also apply to the
income from immovable property of an enterprise and to income
from immovable property used for the performance of
independent personal services.
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1. The profits of an enterprise of a Contracting State shall be
taxable only in that State unless the enterprise carries on or has
carried on business in the other Contracting State through a
permanent establishment situated therein. If the enterprise carries
on or has carried on business as aforesaid, the profits of the
enterprise may be taxed in the other State but only so much of
them as is attributable to that permanent establishment.
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2. Subject to the provisions of paragraph 3, where an
enterprise of a Contracting State carries on or has carried on
business in the other Contracting State through a permanent
establishment situated therein, there shall in each Contracting
State be attributed to that permanent establishment the profits
which it might be expected to make if it were a distinct and
separate enterprise engaged in the same or similar activities under
the same or similar conditions and dealing wholly independently
with the enterprise of which it is a permanent establishment.
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3. In determining the profits of a permanent establishment,
there shall be allowed those deductible expenses which are
incurred for the purposes of the permanent establishment
including executive and general administrative expenses,
whether incurred in the State in which the permanent
establishment is situated or elsewhere.
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4. Insofar as it has been customary in a Contracting State to
determine the profits to be attributed to a permanent
establishment on the basis of an apportionment of the total profits
of the enterprise to its various parts, nothing in paragraph 2 shall
preclude that Contracting State from determining the profits to be
taxed by such an apportionment as may be customary; the
method of apportionment adopted shall, however, be such that
the result shall be in accordance with the principles contained in
this Article.
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5. No profits shall be attributed to a permanent establishment
by reason of the mere purchase by that permanent establishment
of goods or merchandise for the enterprise.
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6. For the purposes of the preceding paragraphs, the profits to
be attributed to the permanent establishment shall be determined
by the same method year by year unless there is good and
sufficient reason to the contrary.
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7. Where profits include items of income which are dealt with
separately in other Articles of this Agreement, then, the
provisions of those Articles shall not be affected by the
provisions of this Article.
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1. Profits of an enterprise of a Contracting State from the
operation of ships or aircraft in international traffic shall be
taxable only in that State.
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2. Profits of an enterprise of a Contracting State from the use
or rental of containers (including trailers, barges, and related
equipment for the transport of containers) used in international
traffic shall be taxable only in that State.
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3. Notwithstanding the provisions of Article 7, profits derived
by an enterprise of a Contracting State from a voyage of a ship
where the principal purpose of the voyage is to transport
passengers or property between places in the other Contracting
State, may be taxed in that other State.
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4. The provisions of paragraphs 1 and 2 shall also apply to
profits from the participation in a pool, a joint business or an
international operating agency.
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Where
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(a) an enterprise of a Contracting State participates directly or
indirectly in the management, control or capital of an
enterprise of the other Contracting State, or
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(b) the same persons participate directly or indirectly in the
management, control or capital of an enterprise of a
Contracting State and an enterprise of the other Contracting
State,
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and in either case conditions are made or imposed between the
two enterprises in their commercial or financial relations which
differ from those which would be made between independent
enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by reason
of those conditions, have not so accrued, may be included in the
profits of that enterprise and taxed accordingly.
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1. Dividends paid by a company which is a resident of a
Contracting State to a resident of the other Contracting State may
be taxed in that other State.
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2. However, such dividends may also be taxed in the
Contracting State of which the company paying the dividends is
a resident and according to the laws of that State, but if a resident
of the other Contracting State is the beneficial owner of the
dividends the tax so charged shall not exceed:
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(a) 5 per cent of the gross amount of the dividends if the
beneficial owner is a company that controls at least 10 per cent
of the voting power in the company paying the dividends;
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(b) 15 per cent of the gross amount of the dividends in all other
cases.
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The provisions of this paragraph shall not affect the taxation of
the company in respect of the profits out of which the dividends
are paid.
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3. The term ``dividends'' as used in this Article means:
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(a) dividends on shares including income from shares,
``jouissance'' shares or ``jouissance'' rights, mining shares,
founders' shares or other rights, not being debt-claims,
participating in profits, and
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(b) other income which is subjected to the same taxation
treatment as income from shares by the laws of the State of
which the company making the distribution is a resident, and
for the purpose of taxation in the Federal Republic of
Germany, income derived by a ``stiller Gesellschafter''
(sleeping partner) from the partner's participation as such,
income from a ``partiarisches Darlehen'' (loan, with interest
rate linked to borrower's profit) or ``Gewinnobligationen''
(profit sharing bonds) and similar remuneration which is
dependent on profits as well as distributions on certificates of
an investment trust.
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4. The provisions of paragraphs 1 and 2 shall not apply if the
beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting
State of which the company paying the dividends is a resident,
through a permanent establishment situated therein, or performs
in that other State independent personal services from a fixed
base situated therein, and the holding in respect of which the
dividends are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article
7 or Article 14, as the case may be, shall apply.
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5. Where a company which is a resident of a Contracting State
and not also a resident of the other Contracting State derives
profits or income from the other State, that other State may not
impose any tax on the dividends paid by the company, except
insofar as such dividends are paid to a resident of that other State
or insofar as the holding in respect of which the dividends are
paid is effectively connected with a permanent establishment or
a fixed base situated in that other State, nor subject the company's
undistributed profits to a tax on the company's undistributed
profits, even if the dividends paid or the undistributed profits
consist wholly or partly of profits or income arising in such other
State.
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6. Notwithstanding any provision in this Agreement, Canada
may impose on the earnings of a company attributable to
permanent establishments in Canada, or on the earnings
attributable to the alienation of immovable property situated in
Canada by a company carrying on a trade in immovable property,
tax in addition to the tax which would be chargeable on the
earnings of a company that is a resident of Canada, provided that
the rate of such additional tax so imposed shall not exceed the
percentage limitation provided for under subparagraph (a) of
paragraph 2 of the amount of such earnings which have not been
subjected to such additional tax in previous taxation years. For
the purpose of this provision, the term ``earnings'' means:
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(a) the earnings attributable to the alienation of such
immovable property situated in Canada as may be taxed by
Canada under the provisions of Article 6 or of paragraph 1 of
Article 13, and
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(b) the profits attributable to such permanent establishments
in Canada (including gains from the alienation of property
forming part of the business property, referred to in paragraph
2 of Article 13, of such permanent establishments) in
accordance with Article 7 in a year and previous years after
deducting therefrom:
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(aa) business losses attributable to such permanent
establishments (including losses from the alienation of
property forming part of the business property of such
permanent establishments) in such year and previous years,
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(bb) all taxes chargeable in Canada on such profits, other
than the additional tax referred to herein,
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(cc) the profits reinvested in Canada, provided that the
amount of such deduction shall be determined in
accordance with the provisions of the law of Canada, as
they be amended from time to time without changing the
general principle hereof, regarding the computation of the
allowance in respect of investment in property in Canada,
and
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(dd) five hundred thousand Canadian dollars ($500,000) or
its equivalent in the currency of the Federal Republic of
Germany, less any amount deducted
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(bbb) by a person related thereto from the same or a
similar business as that carried on by the company
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1. Interest arising in a Contracting State and paid to a resident
of the other Contracting State may be taxed in that other State.
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2. However, such interest may also be taxed in the Contracting
State in which it arises and according to the laws of that State, but
if a resident of the other Contracting State is the beneficial owner
of the interest the tax so charged shall not exceed 10 per cent of
the gross amount of the interest.
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3. Notwithstanding the provisions of paragraph 2, interest
arising in a Contracting State and paid to a resident of the other
Contracting State who is the beneficial owner thereof shall be
taxable only in that other State to the extent that such interest:
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(a) is paid in connection with the sale on credit of any
equipment or merchandise by the purchasing person to the
selling person, except where the sale is made between
associated persons;
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(b) is paid in respect of indebtedness of the government of a
Contracting State or of a ``Land'', or political subdivision or
local authority thereof;
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(c) is paid to the Canadian Export Development Corporation
or to the German ``Kreditanstalt für Wiederaufbau'' or the
``Deutsche Gesellschaft für Wirtschaftliche
Zusammenarbeit'';
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(d) is paid to the government of a Contracting State or of a
``Land'', or political subdivision thereof, or to the central bank
of a Contracting State; or
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(e) is paid to a resident of the other State which was constituted
and is operated exclusively to administer or provide benefits
under one or more pension, retirement or other employee
benefits plans provided that:
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(aa) the resident is generally exempt from income tax in the
other State, and
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(bb) the interest is not derived from carrying on a trade or
a business or from an associated person.
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For the purpose of subparagraphs (a) and (e), a person is
associated with another person if it is related to, or controlled or
managed by the other person or if both persons are related to, or
controlled by or managed by a third person. For the purpose of
the preceding sentence, a person is related to another person if
more than 50 per cent of the voting shares belongs to the other
person, to persons with whom the other person is associated, or
to other persons so associated with it.
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4. The term ``interest'' as used in this Article means income
from debt-claims of every kind, whether or not secured by
mortgage, and in particular, income from government securities
and income from bonds or debentures, including premiums and
prizes attaching to such securities, bonds or debentures as well as
income which is subjected to the same taxation treatment as
income from money lent by the laws of the State in which the
income arises. However, the term ``interest'' does not include
income dealt with in Article 10.
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5. The provisions of paragraphs 1 to 3 shall not apply if the
beneficial owner of the interest, being a resident of a Contracting
State, carries on business in the other Contracting State in which
the interest arises, through a permanent establishment situated
therein, or performs in that other State independent personal
services from a fixed base situated therein, and the debt-claim in
respect of which the interest is paid is effectively connected with
such permanent establishment or fixed base. In such case the
provisions of Article 7 or Article 14, as the case may be, shall
apply.
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6. Interest shall be deemed to arise in a Contracting State when
the payer is a resident of that State. Where, however, the person
paying the interest, whether the payer is a resident of a
Contracting State or not, has in a Contracting State a permanent
establishment or a fixed base in connection with which the
indebtedness on which the interest is paid was incurred, and such
interest is borne by such permanent establishment or fixed base,
then such interest shall be deemed to arise in the State in which
the permanent establishment or fixed base is situated.
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7. Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some
other person, the amount of the interest, having regard to the
debt-claim for which it is paid, exceeds the amount which would
have been agreed upon by the payer and the beneficial owner in
the absence of such relationship, the provisions of this Article
shall apply only to the last-mentioned amount. In such case, the
excess part of the payments shall remain taxable according to the
laws of each Contracting State, due regard being had to the other
provisions of this Agreement.
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1. Royalties arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that other
State.
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2. However, such royalties may also be taxed in the
Contracting State in which they arise and according to the laws
of that State, but if a resident of the other Contracting State is the
beneficial owner of the royalties the tax so charged shall not
exceed 10 per cent of the gross amount of the royalties.
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3. Notwithstanding the provisions of paragraph 2, royalties
arising in a Contracting State and paid to a resident of the other
Contracting State who is the beneficial owner of the royalties
shall be taxable only in that other State if they are:
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(a) copyright royalties and other like payments in respect of
the production or reproduction of any literary, dramatic,
musical or artistic work (but not including royalties in respect
of motion picture films nor royalties in respect of works on
film or videotape or other means of reproduction for use in
connection with television broadcasting);
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(b) royalties for the use of, or the right to use, computer
software or any patent or for information concerning
industrial, commercial or scientific experience (but not
including any such royalty provided in connection with a
rental or franchise agreement).
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4. The term ``royalties'' as used in this Article means payments
of any kind received as a consideration for the use of, or the right
to use, any copyright, patent, trade mark, design or model, plan,
secret formula or process or other intangible property, or for the
use of, or the right to use, industrial, commercial or scientific
equipment, or for information concerning industrial, commercial
or scientific experience, and includes payments of any kind in
respect of motion picture films and works on film, videotape or
other means of reproduction for use in connection with
television.
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5. The provisions of paragraphs 1 to 3 shall not apply if the
beneficial owner of the royalties, being a resident of a
Contracting State, carries on business in the other Contracting
State in which the royalties arise, through a permanent
establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein,
and the right or property in respect of which the royalties are paid
is effectively connected with such permanent establishment or
fixed base. In such case the provisions of Article 7 or Article 14,
as the case may be, shall apply.
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6. Royalties shall be deemed to arise in a Contracting State
when the payer is a resident of that State. Where, however, the
person paying the royalties, whether the payer is a resident of a
Contracting State or not, has in a Contracting State a permanent
establishment or a fixed base in connection with which the
obligation to pay the royalties was incurred, and such royalties
are borne by such permanent establishment or fixed base, then
such royalties shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated.
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7. Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some
other person, the amount of the royalties, having regard to the
use, right or information for which they are paid, exceeds the
amount which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned
amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State,
due regard being had to the other provisions of this Agreement.
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1. Gains derived by a resident of a Contracting State from the
alienation of immovable property referred to in Article 6 and
situated in the other Contracting State may be taxed in that other
State.
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2. Gains from the alienation of movable property forming part
of the business property of a permanent establishment which an
enterprise of a Contracting State has in the other Contracting
State or of movable property pertaining to a fixed base available
to a resident of a Contracting State in the other Contracting State
for the purpose of performing independent personal services,
including such gains from the alienation of such a permanent
establishment (alone or with the whole enterprise) or of such a
fixed base may be taxed in that other State.
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3. Gains derived by an enterprise of a Contracting State from
the alienation of ships or aircraft operated, or containers used, in
international traffic or movable property pertaining to the
operation of such ships or aircraft, shall be taxable only in that
State.
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4. Gains derived by a resident of a Contracting State from the
alienation of:
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(a) shares (other than shares listed on an approved stock
exchange in the other Contracting State) forming part of a
substantial interest in the capital stock of a company which is
a resident of that other State the value of which shares is
derived principally from immovable property situated in that
other State; or
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(b) an interest in a partnership, trust or estate the value of which
is derived principally from immovable property situated in the
other Contracting State,
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may be taxed in that other State. For the purposes of this
paragraph, the term ``immovable property'' does not include
property (other than rental property) in which the business of the
company, partnership, trust or estate is carried on; and a
substantial interest in the capital stock of a company exists when
the resident and persons related thereto own 10 per cent or more
of the shares of any class of the capital stock of a company.
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5. Where a resident of a Contracting State alienates property
in the course of an organization, reorganization, amalgamation,
division or similar transaction and profit, gain or income with
respect to such alienation is not recognized for the purpose of
taxation in that State, if requested to do so by the person who
acquires the property, the competent authority of the other
Contracting State may agree, subject to terms and conditions
satisfactory to such competent authority, to defer the recognition
of the profit, gain or income with respect to such property for the
purpose of taxation in that other State.
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6. Gains from the alienation of any property, other than those
mentioned in paragraphs 1 to 4 shall be taxable only in the
Contracting State of which the alienator is a resident.
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7. In the case of an individual who has been a resident of a
Contracting State and who has become a resident of the other
Contracting State:
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(a) the provisions of paragraph 6 shall not affect the right of
either of the Contracting States to levy, according to its law, a
tax on gains from the alienation of any property derived by
such individual at any time during the ten years following the
date on which the individual has ceased to be a resident of the
first-mentioned State;
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(b) where that individual is treated for the purposes of taxation
in the first-mentioned State as having alienated a property and
is taxed in that State by reason thereof, the individual may
elect to be treated for the purposes of taxation in the other State
as if the individual had, immediately before becoming a
resident of that State, sold and repurchased the property for an
amount equal to its fair market value at that time. However,
this provision shall not apply to property any gain from which,
arising immediately before the individual became a resident of
that other State, may be taxed in that other State nor to
immovable property situated in a third State.
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1. Income derived by an individual who is a resident of a
Contracting State in respect of professional services or other
activities of an independent character shall be taxable only in that
State unless the individual has a fixed base regularly available in
the other Contracting State for the purpose of performing the
activities. If the individual has or had such a fixed base, the
income may be taxed in the other State but only so much of it as
is attributable to that fixed base.
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2. The term ``professional services'' includes especially
independent scientific, literary, artistic, educational or teaching
activities as well as the independent activities of physicians,
lawyers, engineers, architects, dentists and accountants.
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1. Subject to the provisions of Articles 16, 18 and 19, salaries,
wages and other remuneration derived by a resident of a
Contracting State in respect of an employment shall be taxable
only in that State unless the employment is exercised in the other
Contracting State. If the employment is so exercised, such
remuneration as is derived therefrom may be taxed in that other
State.
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2. Notwithstanding the provisions of paragraph 1,
remuneration derived by a resident of a Contracting State in
respect of an employment exercised in the other Contracting
State shall be taxable only in the first-mentioned State if:
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(a) the recipient is present in the other State for a period or
periods not exceeding in the aggregate 183 days in any twelve
month period commencing or ending in the fiscal year
concerned, and
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(b) the remuneration is paid by, or on behalf of, an employer
who is not a resident of the other State, and
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(c) the remuneration is not borne by a permanent
establishment or a fixed base which the employer has in the
other State.
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3. Notwithstanding the preceding provisions of this Article,
remuneration derived in respect of an employment exercised
aboard a ship or aircraft operated in international traffic by an
enterprise of a Contracting State may be taxed in that State.
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1. Directors' fees and other similar payments derived by a
resident of a Contracting State in that resident's capacity as a
member of the board of directors of a company which is a
resident of the other Contracting State, may be taxed in that other
State.
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2. Salaries, wages and other remuneration derived by a
resident of a Contracting State in that resident's capacity as an
officer, or an official responsible under commercial law for the
overall direction of the affairs, of a company which is a resident
of the other Contracting State may be taxed in that other State.
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1. Notwithstanding the provisions of Articles 7, 14 and 15,
income derived by a resident of a Contracting State as an
entertainer, such as a theatre, motion picture, radio or television
artiste, or a musician, or as a sportsperson, from that resident's
personal activities as such exercised in the other Contracting
State, may be taxed in that other State.
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2. Where income in respect of personal activities exercised by
an entertainer or a sportsperson in that individual's capacity as
such accrues not to the entertainer or sportsperson personally but
to another person, that income may, notwithstanding the
provisions of Articles 7, 14 and 15, be taxed in the Contracting
State in which the activities of the entertainer or sportsperson are
exercised.
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3. The provisions of paragraphs 1 and 2 shall not apply to
income derived from activities performed in a Contracting State
by entertainers or sportspersons if the visit to that State is
substantially supported, directly or indirectly, by public funds of
the other Contracting State or a ``Land'' or a political subdivision
or a local authority thereof. In such a case, the income shall be
taxable only in the Contracting State of which the entertainer or
sportsperson is a resident.
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1. Periodic or non-periodic pensions and other similar
allowances derived by a resident of a Contracting State shall be
taxable only in that State. However, such pensions and
allowances may also be taxed in the other Contracting State if:
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(a) they are derived from sources in that other Contracting
State;
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(b) contributions to the pension fund or plan were deductible
for the purposes of taxation in that other State or if the pension
was funded by that other State, a ``Land'', a political
subdivision, a local authority or a governmental
instrumentality thereof; and
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(c) they are not paid in respect of services rendered or activities
exercised outside that other State by a person when this person
was not a resident of that other State.
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2. Annuities derived by a resident of a Contracting State shall
be taxable only in that State unless they are derived from sources
within the other Contracting State. If they are so derived, such
annuities may be taxed in that other State. The term ``annuities''
means stated sums payable periodically at stated times, during
life or during a specified or ascertainable period of time, under an
obligation to make the payments in return for adequate and full
consideration in money or money's worth but does not include
any annuity the cost of which was deductible for the purposes of
taxation in the Contracting State in which it was acquired.
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3. Notwithstanding any provision in this Agreement:
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(a) war pensions and allowances (including pensions and
allowances paid to war veterans or paid as a consequence of
damages or injuries suffered as a consequence of war)
received from Canada and paid to a resident of the Federal
Republic of Germany shall be taxable only in Canada;
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(b) periodic or non-periodic payments received by a resident
of Canada from the Federal Republic of Germany, or a
``Land'' or a governmental instrumentality thereof as
compensation for an injury or damage sustained as a result of
hostilities or past political persecution shall be taxable only in
the Federal Republic of Germany;
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(c) benefits under the social security legislation in a
Contracting State paid to a resident of the other Contracting
State may be taxed in that other State, but the amount of any
such benefits that would be excluded from taxable income in
the first-mentioned State if the recipient were a resident
thereof shall be exempt from taxation in that other State;
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(d) alimony or similar allowances arising in a Contracting
State and paid to a resident of the other Contracting State shall
be taxable only in that other State.
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1. (a) Salaries, wages and similar remuneration, other than a
pension, paid by a Contracting State, a ``Land'', or a political
subdivision or a local authority or an instrumentality thereof
to an individual in respect of services rendered to that State,
``Land'', subdivision, authority or instrumentality shall be
taxable only in that State.
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(b) However, such salaries, wages and similar remuneration
shall be taxable only in the other Contracting State if the
services are rendered in that State and the individual is a
resident of that State other than a national of the State referred
to in subparagraph (a) whose salary, wage or similar
remuneration is taxed in the last-mentioned State.
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2. The provisions of paragraph 1 shall not apply to
remuneration in respect of services rendered in connection with
a business carried on by a Contracting State, a ``Land'' or a
political subdivision or a local authority or an instrumentality
thereof.
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3. In this Article, the term ``instrumentality'' means any agent
or entity created or organized by the Government of either
Contracting State or a ``Land'' or political subdivision or local
authority thereof in order to carry out functions of a
governmental nature which is specified and agreed to in letters
exchanged between the competent authorities of the Contracting
States.
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Payments which a student, apprentice or business trainee
(including a ``Voluntaer'' or a ``Praktikant'') who is, or was,
immediately before visiting a Contracting State, a resident of the
other Contracting State and who is present in the first-mentioned
State solely for the purpose of that individual's education or
training receives for the purpose of that individual's
maintenance, education or training shall not be taxed in that
State, provided that such payments arise from sources outside
that State.
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1. Items of income of a resident of a Contracting State,
wherever arising, not dealt with in the foregoing Articles of this
Agreement shall be taxable only in that State.
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2. The provisions of paragraph 1 shall not apply to income,
other than income from immovable property as defined in
paragraph 2 of Article 6, if the recipient of such income, being a
resident of a Contracting State, carries on business in the other
Contracting State through a permanent establishment situated
therein, or performs in that other State independent personal
services from a fixed base situated therein, and the right or
property in respect of which the income is paid is effectively
connected with such permanent establishment or fixed base. In
such case the provisions of Article 7 or Article 14, as the case may
be, shall apply.
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3. Notwithstanding the provisions of paragraphs 1 and 2,
items of income derived by a resident of a Contracting State from
sources in the other Contracting State may also be taxed in that
other State.
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1. Capital represented by immovable property referred to in
Article 6, owned by a resident of a Contracting State and situated
in the other Contracting State, may be taxed in that other State.
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2. Capital represented by movable property forming part of
the business property of a permanent establishment which an
enterprise of a Contracting State has in the other Contracting
State or by movable property pertaining to a fixed base available
to a resident of a Contracting State in the other Contracting State
for the purpose of performing independent personal services,
may be taxed in that other State.
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3. Capital represented by ships and aircraft operated, and
containers used, by an enterprise of a Contracting State in
international traffic and by movable property pertaining to the
operation of such ships or aircraft shall be taxable only in that
State.
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4. All other elements of capital of a resident of a Contracting
State shall be taxable only in that State.
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1. In the case of a resident of Canada, double taxation shall be
avoided as follows:
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(a) Subject to the existing provisions of the law of Canada
regarding the deduction from tax payable in Canada of tax
paid in a territory outside Canada and to any subsequent
modification of those provisions, which shall not affect the
general principle hereof, and unless a greater deduction or
relief is provided under the laws of Canada, German tax (other
than capital tax) payable in accordance with this Agreement
on profits, income or gains arising in the Federal Republic of
Germany shall be deducted from any Canadian tax payable in
respect of such profits, income or gains.
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(b) Subject to the existing provisions of the law of Canada
regarding the allowance as a credit against Canadian tax of tax
payable in a territory outside Canada and to any subsequent
modification of those provisions - which shall not affect the
general principle hereof - where a company which is a
resident of the Federal Republic of Germany pays a dividend
to a company which is a resident of Canada and which controls
directly or indirectly at least 10 per cent of the voting power
in the first-mentioned company, the credit shall take into
account the tax payable in the Federal Republic of Germany
by that first-mentioned company in respect of the profits out
of which such dividend is paid.
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(c) Where in accordance with any provision of the Agreement
income derived or capital owned by a resident of Canada is
exempt from tax in Canada, Canada may nevertheless, in
calculating the amount of tax on other income or capital, take
into account the exempted income or capital.
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(d) For the purposes of this paragraph, profits, income or gains
of a resident of Canada shall be deemed to arise from sources
in the Federal Republic of Germany if they may be taxed in the
Federal Republic of Germany in accordance with this
Agreement.
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2. Where a resident of the Federal Republic of Germany
derives income or owns capital which, in accordance with the
provisions of this Agreement, may be taxed in Canada, double
taxation shall be avoided as follows:
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(a) Subject to the provisions of subparagraph (b), there shall
be excluded from the basis upon which German tax is
imposed, any item of income from sources within Canada and
any item of capital situated within Canada, which according
to the foregoing Articles of this Agreement may be taxed, or
shall be taxable only, in Canada; in the determination of its rate
of tax applicable to any item of income or capital not so
excluded, the Federal Republic of Germany will, however,
take into account the items of income and capital, which
according to the foregoing Articles may be taxed in Canada.
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The foregoing provisions of this paragraph shall also apply to
dividends on shares which are paid to a company which is a
resident of the Federal Republic of Germany by a company
which is a resident of Canada if at least 10 per cent of the
capital of the Canadian company is held directly by the
German company. There shall also be excluded from the basis
upon which German tax is imposed any participation the
dividends of which are excluded or, if paid, would be
excluded, according to the immediately foregoing sentence
from the basis upon which German tax is imposed.
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(b) There shall be allowed as a credit against German tax on
income, subject to the provisions of German tax law regarding
credit for foreign tax, the Canadian tax (including taxes on
income paid to any political subdivision or local authority in
Canada) paid in accordance with the provisions of this
Agreement referred to below on the following items of
income:
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(aa) dividends within the meaning of Article 10 which are
not dealt with in subparagraph (a) above;
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(bb) interest within the meaning of Article 11 and royalties
within the meaning of Article 12;
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(cc) gains from the alienation of property taxable in Canada
by reason only of Article 13, paragraph 4 and subparagraph
(a) of paragraph 7;
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(dd) income within the meaning of Article 15, paragraph 3
and Articles 16 and 17;
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(ee) pensions and annuities within the meaning of Article
18, paragraphs 1 and 2 and subparagraph (c) of paragraph
3;
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(ff) income taxable in Canada by reason only of Article 21.
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(c) Instead of the provisions of subparagraph (a), the
provisions of subparagraph (b) shall apply to income within
the meaning of Articles 7 and 10 and to items of capital
underlying such income unless the resident of the Federal
Republic of Germany proves that the gross receipts of the
permanent establishment in the business year in which the
profit was realised, or the gross receipts of the company
resident in Canada in the business year for which the dividend
was distributed, derive exclusively or almost exclusively from
activities coming under Section 8 paragraph 1 subparagraphs
1 to 6 of the German Law on External Tax Relations
(``Aussensteuergesetz'') or from participations coming under
Section 8 paragraph 2 of that Law; the same shall apply to
immovable property forming part of the business property of
a permanent establishment (paragraph 4 of Article 6) and to
gains from the alienation of such immovable property
(paragraph 1 of Article 13) and of movable property forming
part of the business property of the permanent establishment
(paragraph 2 of Article 13).
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1. Nationals of a Contracting State shall not be subjected in the
other Contracting State to any taxation or any requirement
connected therewith, which is more burdensome than the
taxation and connected requirements to which nationals of that
other State in the same circumstances are or may be subjected.
This provision shall, notwithstanding the provisions of Article 1,
also apply to individuals who are not residents of one or both of
the Contracting States.
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2. The taxation on a permanent establishment which an
enterprise of a Contracting State has in the other Contracting
State shall not be less favourably levied in that other State than
the taxation levied on enterprises of that other State carrying on
the same activities. This provision shall not be construed as
obliging a Contracting State to grant to residents of the other
Contracting State any personal allowances, reliefs and
reductions for taxation purposes which it grants to its own
residents.
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3. Enterprises of a Contracting State, the capital of which is
wholly or partly owned or controlled, directly or indirectly, by
one or more residents of the other Contracting State, shall not be
subjected in the first-mentioned State to any taxation or any
requirement connected therewith which is more burdensome
than the taxation and connected requirements to which other
similar enterprises of the first-mentioned State, the capital of
which is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of a third State, are or may be
subjected.
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4. The provisions of this Article shall, notwithstanding the
provisions of Article 2, apply to all taxes imposed by a
Contracting State.
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1. Where a person considers that the actions of one or both of
the Contracting States result or will result for that person in
taxation not in accordance with the provisions of this Agreement,
that person may, irrespective of the remedies provided by the
domestic law of those States, address to the competent authority
of the Contracting State of which that person is a resident or, if
that person's case comes under paragraph 1 of Article 24, to that
of the Contracting State of which that person is a national, an
application in writing stating the grounds for claiming the
revision of such taxation. To be admissible, the said application
must be submitted within two years from the first notification of
the action resulting in taxation not in accordance with the
provisions of the Agreement.
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2. The competent authority shall endeavour, if the objection
appears to it to be justified and if it is not itself able to arrive at an
appropriate solution, to resolve the case by mutual agreement
with the competent authority of the other Contracting State, with
a view to the avoidance of taxation not in accordance with the
Agreement.
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3. The competent authorities of the Contracting States shall
endeavour to resolve by mutual agreement any difficulties or
doubts arising as to the interpretation or application of the
Agreement. They may also consult together for the elimination
of double taxation in cases not provided for in the Agreement.
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4. In particular, the competent authorities of the Contracting
States may consult together to endeavour to agree:
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(a) to the same attribution of profits to an enterprise of a
Contracting State and to its permanent establishment situated
in the other Contracting State;
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(b) to the same allocation of profits between associated
enterprises as provided for in Article 9;
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(c) to the method of avoiding double taxation in the case of an
estate or trust.
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5. The competent authorities of the Contracting States may
communicate with each other directly for the purpose of
applying the provisions of this Agreement.
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6. If any question, difficulty or doubt arising as to the
interpretation or application of the Agreement cannot be
resolved or dealt with by the competent authorities as a result of
the application of the provisions of paragraphs 1, 2 or 3, these
questions, difficulties or doubts may, if the competent authorities
agree, be submitted to an arbitration commission. The decisions
of the commission shall be binding. The composition of the
commission and the arbitration procedures shall be determined,
after consultation between the competent authorities, through an
exchange of diplomatic notes between the Contracting States.
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1. The competent authorities of the Contracting States shall
exchange such information as is relevant for carrying out the
provisions of this Agreement or of the domestic laws in the
Contracting States concerning taxes covered by the Agreement
insofar as the taxation thereunder is not contrary to the
Agreement. The exchange of information is not restricted by
Article 1. Any information received by a Contracting State shall
be treated as secret in the same manner as information obtained
under the domestic laws of that State and shall be disclosed only
to persons or authorities (including courts and administrative
bodies) concerned with the assessment or collection of the taxes
covered by the Agreement or, notwithstanding the provisions of
paragraph 4, the taxes imposed by a ``Land'', or a political
subdivision or local authority of a Contracting State that are
substantially similar to the taxes covered by the Agreement. Such
persons or authorities shall use the information only for such
purposes. Such information may be disclosed in public court
proceedings or in judicial decisions only if the competent
authority of the Contracting State supplying the information
raises no objection.
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2. In no case shall the provisions of paragraph 1 be construed
so as to impose on a Contracting State the obligation:
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(a) to carry out administrative measures at variance with the
laws or the administrative practice of that or of the other
Contracting State;
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(b) to supply information which is not obtainable under the
laws or in the normal course of the administration of that or of
the other Contracting State;
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(c) to supply information which would disclose any trade,
business, industrial, commercial or professional secret or trade
process, or information, the disclosure of which would be
contrary to public policy (ordre public).
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3. The competent authorities of the Contracting States shall
agree upon the principles and procedures relating to the
exchange of personal data.
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4. For the purposes of this Article, the taxes covered by the
Agreement are, notwithstanding the provisions of Article 2, all
taxes imposed by a Contracting State.
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1. The Contracting States undertake to lend assistance to each
other in the collection of taxes referred to in paragraph 8, together
with interest, costs, additions to such taxes and administrative
penalties, referred to in this Article as a ``revenue claim''. The
provisions of this Article are not restricted by Article 1.
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2. An application for assistance in the collection of a revenue
claim shall include a certification by the competent authority of
the applicant State that, under the laws of that State, the revenue
claim has been finally determined. For the purposes of this
Article, a revenue claim is finally determined when the applicant
State has the right under its internal law to collect the revenue
claim and all administrative and judicial rights of the taxpayer to
restrain collection in the applicant State have lapsed or been
exhausted.
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3. A revenue claim of the applicant State that has been finally
determined may be accepted for collection by the competent
authority of the requested State and, subject to the provisions of
paragraph 7, if accepted shall be collected by the requested State
as though such revenue claim were the requested State's own
revenue claim finally determined in accordance with the laws
applicable to the collection of the requested State's own taxes.
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4. Where an application for collection of a revenue claim in
respect of a taxpayer is accepted:
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(a) by the Federal Republic of Germany, the revenue claim
shall be enforced by the Federal Republic of Germany in the
same way as a revenue claim under Federal Republic of
Germany laws against the taxpayer as of the time the
application is received; and
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(b) by Canada, the revenue claim shall be treated by Canada
as an amount payable under the Income Tax Act, the collection
of which is not subject to any restriction.
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5. Nothing in this Article shall be construed as creating or
providing any rights of administrative or judicial review of the
applicant State's finally determined revenue claim by the
requested State, based on any such rights that may be available
under the laws of either Contracting State. Proceedings relating
to measures taken under this Article by the requested State shall
be brought only before the appropriate body of that State. If, at
any time pending execution of a request for assistance under this
Article, the applicant State loses the right under its internal law
to collect the revenue claim, the competent authority of the
applicant State shall promptly withdraw the request for
assistance in collection.
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6. Unless the competent authorities of the Contracting States
otherwise agree, the ordinary costs incurred in providing
collection assistance shall be borne by the requested State and
any extraordinary costs so incurred shall be borne by the
applicant State.
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7. A revenue claim of an applicant State accepted for
collection shall not have in the requested State any priority
accorded to the revenue claims of the requested State even if the
recovery procedure used is the one applicable to its own revenue
claims.
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8. Notwithstanding the provisions of Article 2, the provisions
of this Article shall apply to all categories of taxes collected by
or on behalf of the Government of a Contracting State including,
in the case of the Federal Republic of Germany, the ``Laender''.
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9. Nothing in this Article shall be construed as imposing on
either Contracting State the obligation to carry out administrative
measures at variance with its laws or administrative practice or
that would be contrary to its fundamental principles of tax policy
or its public policy (ordre public).
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10. The competent authorities of the Contracting States shall
agree upon the mode of application of this Article, including
agreement to ensure comparable levels of assistance to each of
the Contracting States.
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1. Nothing in this Agreement shall affect the fiscal privileges
of members of diplomatic missions or consular posts under the
general rules of international law or under the provisions of
special agreements.
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2. Notwithstanding the provisions of Article 4, an individual
who is a member of a diplomatic mission, consular post or
permanent mission of a Contracting State which is situated in the
other Contracting State or in a third State shall be deemed for the
purposes of the Agreement to be a resident of the sending State
if:
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(a) in accordance with international law that individual is not
liable to tax in the receiving State in respect of income from
sources outside that State or on capital situated outside that
State, and
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(b) that individual is liable in the sending State to the same
obligations in relation to tax on total income or on capital as
are residents of that State.
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3. The Agreement shall not apply to International
Organizations, to organs or officials thereof and to persons who
are members of a diplomatic mission, consular post or permanent
mission of a third State, being present in a Contracting State and
not liable in either Contracting State to the same obligations in
respect of taxes on income or on capital as are residents thereof.
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1. With respect to income taxable in a Contracting State, the
provisions of this Agreement shall not be construed to restrict in
any manner any exemption, credit, allowance or other deduction
accorded:
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(a) by the laws of a Contracting State in the determination of
the tax imposed by that State; or
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(b) by any other agreement entered into by a Contracting
State.
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2. It is understood that nothing in the Agreement shall be
construed as preventing:
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(a) Canada from imposing a tax on amounts included in the
income of a resident of Canada with respect to a partnership,
trust or controlled foreign affiliate, in which that resident has
an interest;
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(b) the Federal Republic of Germany from imposing its taxes
on amounts included in the income of a resident of the Federal
Republic of Germany according to part 4 of the German
``Aussensteuergesetz''.
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Where such imposition of tax gives rise to a double taxation, the
competent authorities shall consult for the elimination of such
double taxation according to paragraph 3 of Article 25.
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3. The Agreement shall not apply to any company (nor to
income derived from such company by a shareholder thereof),
trust or partnership that is a resident of a Contracting State and is
beneficially owned or controlled directly or indirectly by one or
more persons who are not residents of that State, if the amount of
the tax imposed on the income or capital of the company, trust or
partnership by that State is substantially lower than the amount
that would be imposed by that State if all of the shares of the
capital stock of the company or all of the interests in the trust or
partnership, as the case may be, were beneficially owned by one
or more individuals who were residents of that State.
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4. Contributions in a year in respect of services rendered in that
year paid by, or on behalf of, an individual who is a resident of
one of the Contracting States or who is temporarily present in that
State, to a pension plan that is recognized for tax purposes in the
other Contracting State shall, during a period not exceeding in
the aggregate 60 months, be treated in the same way for tax
purposes in the first-mentioned State as a contribution paid to a
pension plan that is recognized for tax purposes in that
first-mentioned State, provided that:
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(a) such individual was contributing on a regular basis to the
pension plan for a period ending immediately before the
individual became a resident of or temporarily present in the
first-mentioned State; and
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(b) the competent authority of the first-mentioned State agrees
that the pension plan generally corresponds to a pension plan
recognized for tax purposes by that State.
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For the purposes of this paragraph, ``pension plan'' includes a
pension plan created under the social security system in a
Contracting State.
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5. For purposes of paragraph 3 of Article XXII of the General
Agreement on Trade in Services, the Contracting States agree
that, notwithstanding that paragraph, any dispute between them
as to whether a measure falls within the scope of this Agreement
may be brought before the Council for Trade in Services, as
provided by that paragraph, only with the consent of both
Contracting States. Any doubt as to the interpretation of this
paragraph shall be resolved under paragraph 3 of Article 25 or,
failing agreement under that procedure, pursuant to any other
procedure agreed to by both Contracting States.
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6. Nothing in the Agreement shall be construed as preventing
a Contracting State from denying benefits under the Agreement
where it can reasonably be concluded that to do otherwise would
result in an abuse of the provisions of the Agreement or of the
domestic laws of that State.
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The attached Protocol forms an integral part of this
Agreement.
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1. This Agreement shall enter into force on the date on which
the Contracting States have notified each other that the national
requirements for such entry into force have been fulfilled. The
relevant date shall be the day on which the last notification is
received. The provisions of the Agreement shall have effect:
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(a) in respect of tax withheld at the source on amounts paid or
credited to non-residents on or after the first day of January
2001; and
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(b) in respect of other taxes for taxation years beginning on or
after the first day of January 2001.
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2. The Agreement between Canada and the Federal Republic
of Germany for the Avoidance of Double Taxation with respect
to Taxes on Income and Certain other Taxes signed at Ottawa on
July 17, 1981 shall cease to have effect in respect of taxes to
which this Agreement applies in accordance with the provisions
of paragraph 1 and shall terminate on the last date on which it has
effect in accordance with the foregoing provisions.
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3. Where any greater relief from tax would have been afforded
by any provision of the Agreement between Canada and the
Federal Republic of Germany for the Avoidance of Double
Taxation with respect to Taxes on Income and Certain other
Taxes signed at Ottawa on July 17, 1981 to a resident of either
Contracting State, such provision shall continue to have effect up
to and including the taxation year in which this Agreement enters
into force.
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This Agreement shall remain in force until terminated by a
Contracting State. Either Contracting State may terminate the
Agreement, through diplomatic channels, by giving notice of
termination at least six months before the end of any calendar
year after the year in which the Agreement entered into force. In
such event, the Agreement shall cease to have effect:
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(a) in respect of tax withheld at the source on amounts paid or
credited to non-residents on or after the first day of January in
the calendar year next following the expiration of the
six-month period referred to above; and
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(b) in respect of other taxes for taxation years beginning on or
after the first day of January in the calendar year next
following the expiration of the six-month period referred to
above.
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IN WITNESS WHEREOF the undersigned, duly authorized
to that effect, have signed this Agreement.
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DONE at Berlin, this 19th day of April, 2001, in duplicate, in
the English, French and German languages, each text being
equally authentic.
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FOR CANADA FOR THE FEDERAL REPUBLIC OF GERMANY
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Philip Somerville Gerd Westdickenberg
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Canada and the Federal Republic of Germany have agreed at
the signing at Berlin on April 19, 2001 of the Agreement between
the two States for the Avoidance of Double Taxation with respect
to Taxes on Income and Certain other Taxes, the Prevention of
Fiscal Evasion and the Assistance in Tax Matters, on the
following provisions:
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1. With reference to Article 4, paragraph 1, it is understood that
the term ``resident of a Contracting State'' includes a person that
is liable to tax on world income even if that person is liable to tax
on capital only on capital situated in that State.
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2. With reference to Article 6, the term ``immovable property''
shall include an interest in mineral deposits, sources and other
natural resources and an option in respect of immovable
property.
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3. With reference to Article 10, paragraph 2, income derived
from rights or debt-claims participating in profits (including in
the Federal Republic of Germany income of a ``stiller
Gesellschafter'' from the sleeping partner's participation as such
or from a ``partiarisches Darlehen'' and
``Gewinnobligationen'') that is deductible in determining the
profits of the debtor may be taxed in the Contracting State in
which it arises according to the laws of that State.
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4. With reference to Article 12, paragraph 2, the term ``gross
amount'' does not include turnover taxes.
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5. With reference to income taxable in accordance with Article
18, paragraph 1,
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(a) the rate of Canadian tax charged on periodic pension
payments derived from sources within Canada shall not
exceed the lesser of:
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(aa) 15 per cent of the gross amount of the payment, and
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(bb) the rate determined by reference to the amount of tax
that the recipient of the payment would otherwise be
required to pay for the year on the total amount of the
periodic pension payments received by the individual in
the year, if the individual were resident in Canada,
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(b) German tax shall be levied on pensions derived from
sources within the Federal Republic of Germany only if they
are paid by the Federal Republic of Germany, a ``Land'', a
political subdivision or a local authority thereof.
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6. With reference to Article 18, paragraph 2, the rate of tax
charged by a Contracting State on annuities derived from sources
within that State shall not exceed 15 per cent of the taxable
portion of the payment. However, this limitation shall not apply
to lump-sum payments arising on the surrender, cancellation,
redemption, sale or other alienation of an annuity, or to payments
of any kind under an annuity contract the cost of which was
deductible, in whole or in part, in computing the income of any
person who acquired the contract.
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7. With reference to Article 18, paragraph 3, subparagraph (c),
the competent authority of a Contracting State shall notify the
competent authority of the other Contracting State of changes
made to the amount of social security benefits excluded from the
taxable income of a resident of the first-mentioned State
receiving such benefits.
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8. With reference to Article 18, paragraph 3, subparagraph (d),
in determining the taxable income of an individual who is a
resident of the Federal Republic of Germany there shall be
allowed in respect of alimony or similar allowances paid to an
individual who is a resident of Canada the amount that would be
allowed if that last-mentioned individual were subject to tax in
the Federal Republic of Germany.
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9. With reference to Article 23, paragraph 2, and Article 25,
where a difference of qualification or attribution of income in
Canada and the Federal Republic of Germany, not removed
under a mutual agreement procedure according to Article 25,
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(a) would result in double taxation of such income, the Federal
Republic of Germany shall eliminate such double taxation by
the granting of a credit in accordance with the principles
contained in Article 23, paragraph 2, subparagraph (b);
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(b) would result in an exemption or a relief of such income
from Canadian tax and an exemption from German tax, the
Federal Republic of Germany shall not grant, with respect to
such income, an exemption within the meaning of Article 23,
paragraph 2, subparagraph (a) but shall grant a credit in
accordance with the principles contained in Article 23,
paragraph 2, subparagraph (b).
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10. With reference to Article 23 and Article 25, the Federal
Republic of Germany shall avoid double taxation by a tax credit
as provided for in Article 23, paragraph 2, subparagraph (b) and
not by a tax exemption under Article 23, paragraph 2,
subparagraph (a), if the Federal Republic of Germany has, after
due consultation and subject to the limitations of its internal law,
notified Canada through diplomatic channels of other items of
income to which it intends to apply this paragraph. A notification
made under this paragraph shall have effect from the day the
notification is received.
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11. With reference to Article 26, it is understood that if
information is requested by a Contracting State in accordance
with that Article, the other Contracting State shall endeavour to
obtain the information to which the request relates in the same
way as if its own taxation were involved notwithstanding the fact
that the other State does not, at that time, need such information.
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12. With reference to the Agreement,
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(a) if in the Federal Republic of Germany the taxes on
dividends, interest, royalties or other items of income are
levied on a resident of Canada by deduction at source, then the
right of the Federal Republic of Germany to apply the
deduction of tax at the rate provided for under its domestic law
shall not be affected by the provisions of the Agreement; the
tax so deducted at source shall be refunded upon application
by the taxpayer to the extent that it is reduced or eliminated
under the Agreement;
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(b) refund applications must be submitted by the end of the
fourth year following the calendar year in which the tax that
was deducted at source was assessed on the dividends,
interest, royalties or other items of income; and
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(c) the Federal Republic of Germany may require an
administrative certification by the competent authority of
Canada that the taxpayer is a resident of Canada.
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