Australia: New tax treaty signed with Germany

Australia: New tax treaty signed with Germany

Representatives of the governments of Australia and Germany on 13 November 2015 signed a revised income tax treaty. The treaty, once it is ratified by both countries and enters into force, would replace the treaty that was signed in 1972.

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A release from the Australian Treasurer states that the new treaty “…gives effect to the … BEPS recommendations, demonstrating the Australian Government’s continued commitment to tackling international tax avoidance practices.” Text of the treaty is also provided in this release.

The taxes expressly covered in the treaty are Australian income tax, fringe benefits tax, and resource rent taxes, and German income tax, corporate income tax, trade tax and capital tax.

The new income tax treaty provides:

  • Reduced withholding tax rates for payments of dividends, interest, and royalties
  • An enhanced definition of “permanent establishment” and rules related to permanent establishments
  • New arbitration rules
  • A 10-year time period for making transfer pricing adjustments
  • Other measures intended to prevent potential double taxation

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