Germany: Tax treaty with Australia, other countries; stock-for-stock transactions

Germany: Tax treaty with Australia, other countries

Germany and Australia signed a new income tax treaty that follows, in some instances, the OECD Model Tax Convention, but not in other instances. For example, the treaty includes definitions for installation permanent establishments (PEs) and agency PEs, with the latter defined with a view to the OECD’s base erosion and profit shifting (BEPS) project.

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However, the new treaty does not implement the “authorized OECD approach” for determining profits attributable to a PE as outlined in the OECD Model Tax Convention (2010), but continues to focus on the arm’s length principle of the OECD Model Tax Convention (2008).

 

Read a December 2015 report [PDF 1.69 MB] prepared by the KPMG member firm in Germany: German Tax Monthly (December 2015)

 

Other topics discussed in this report describe:

  • The income tax treatment of a share-for-share transaction with cash compensation (a draft from the Federal Ministry of Finance (BMF))
  • A tax court decision that dividends paid by a non-resident subsidiary covered by a participation exemption privilege under an income tax treaty are subject to the 5% add-back of non-deductible business expenses
  • A tax court decision that rent paid for the temporary use of exhibition space in a trade fair is subject to tax add-back
  • A tax court decision concerning a controlling company within the meaning of the group exemption provision, for purposes of the real estate transfer tax
  • Updates of international information exchange agreements and reports on the entry into force of income tax treaties with Norway and Uzbekistan, and a status update on the income tax treaty between Germany and China

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