On September 30, 2016 the Japanese Ministry of Finance issued a press release announcing that on September 28, 2016 the mutual notifications necessary for the entry into force of the Agreement between Japan and the Federal Republic of Germany for the Elimination of Double Taxation with respect to Taxes on Income and to Certain Other Taxes and the Prevention of Tax Evasion and Avoidance, as signed on December 17, 2015, (Hereafter: the DTA) were completed.
The aforementioned means that based on Article 31, Paragraph 1 of the DTA (“Entry into Force”) the DTA will enter into force on October 28, 2016 (the thirtieth day after the date of receipt of the latter notification).
The fact that the DTA will enter into force on October 26, 2016 on its turn means that based on Article 31, Paragraph 2 of the DTA the provisions of the DTA shall be applicable:
(a) in the case of Japan:
(i) in the case of taxes levied on the basis of a taxable year, for taxes for any taxable years beginning on or after January 1, 2017; and
(ii) in the case of taxes not levied on the basis of a taxable year, for taxes levied on or after January 1, 2017; and
(b) in the case of the Federal Republic of Germany:
(i) in the case of taxes withheld at source, in respect of amounts paid on or after January 1, 2017; and
(ii) in the case of other taxes, in respect of taxes levied for periods beginning on or after January 1, 2017.
With respect to provisions of the article on the exchange of information (Article 25 of DTA). Article 32, Paragraph 3 of the DTA subsequently arranges that notwithstanding the provisions of Article 31, Paragraph 2 of the DTA, the provisions of Article 25 shall have effect from October 28, 2016, without regard to the date on which the taxes are levied or the taxable year to which the taxes relate.
Article 31, Paragraph 4 of the DTA arranges that the Agreement between Japan and the Federal Republic of Germany for the Avoidance of Double Taxation with respect to Taxes on Income and to certain other Taxes signed at Bonn on 22 April 1966, as modified and supplemented by the Protocol signed at Tokyo on 17 April 1979 and the Second Protocol signed at Bonn on 17 February 1983 (hereinafter referred to as “the prior Agreement”), shall cease to be effective from the date upon which this Agreement shall be applicable in respect of the taxes to which the Agreement applies in accordance with the provisions of paragraph 2.
An extensive analyses of the DTA can be found in our article from December 21, 2015.
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