The German Ministry of Finance announced that on February 19, 2016 the Federal Republic of Germany and the Republic of Finland signed a new Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (Hereafter: the new DTA).

Although the DTA has been signed, it has not entered into force yet. For the new DTA to enter into force, the respective ratification procedures have to have been finalized in both countries.

 

When entering into force the new DTA will replace the existing Agreement between the Federal Republic of Germany and the Republic of Finland for the Avoidance of Double Taxation with respect to Taxes on Income and on Capital and Other Taxes stemming, which was signed on July 5, 1979. When the new DTA enters into force also the Agreement between the German Reich and the Republic of Finland on Legal Protection and Legal Assistance in Tax Matters, which was signed in Helsinki on September 25, 1935 will be terminated.

 

Unfortunately no English version of the text of the new DTA is available on the website of the German Ministry of Finance. The German Ministry of Finance has only published German and Finnish versions of the new DTA.

 

Below we will highlight some of the provisions included in the new DTA.

 

Permanent establishment:

Article 5, Paragraph 3 of the new DTA (Permanent establishment) arranges that a building site or construction or installation project constitutes a permanent establishment only if lasts more than twelve months.

 

Dividends

Article 10, Paragraph 2 of the new DTA  limits the dividend withholding tax that a Source State is allowed to withhold over dividend distributions to:

a)     5 percent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership or a German REIT Aktiengesellschaft) which holds directly at least 10 percent of the capital of the company paying the dividends;

b)     15 percent of the gross amount of the dividends in all other cases.

 

Interest

Based on Article 11 of the new DTA (Interest) a Source State is not allowed to withholding tax over interest payments if the beneficial owner of the interest is a resident of the other Contracting State.

 

Royalties

Based on Article 12 of the new DTA (Royalties) a Source State is not allowed to withholding tax over royalties if the beneficial owner of the royalties is a resident of the other Contracting State.

 

Other

Furthermore the new DTA contains provisions regarding a Mutual Agreement Procedure (Article 23) as well as provisions regarding the Exchange of Information (Article 24).

 

To be forwarded to the new DTA, click on the language of your choice. You will then be forwarded to the DTA in that language as available on the website of the German Ministry of Finance (German or Finnish).

 

Are you looking for other DTAs? Then check our section DTAs & TIEAs, a very efficient way to locate numerous DTAs.

 

 

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