German Bundestag Adopted Several Tax Agreements

German Bundestag Adopted Several Tax Agreements

On the recommendation of the finance committee, the lower house of German parliament, Bundestag, adopted the government’s bill regarding double taxation agreements concluded with Luxembourg, the Netherlands and Liechtenstein.

The DTA with Luxembourg, signed on April 23 this year, provides for a reduction of the withholding tax rate levied on dividends from 10% to 5% and for a reduction of the minimum participation from 25% to 10%. This new agreement is a comprehensive revision of the old existing bilateral accord between Germany and Luxembourg, and it corresponds both to the OECD’s Model Convention and to the German and Luxembourg principles on DTA policy. The new treaty retains both the zero rate applied to interest and the 5% rate of withholding tax applicable to royalties.

Dating from April 12, 2012, the DTA with the Netherlands reduces the withholding tax rate imposed on dividends to 5%. The agreement incorporates the provision on the exchange of information (not only banking information but also other information) in order to combat money laundering, corruption and the financing of terrorism.

The DTA with Liechtenstein, signed on November 17 last year, provides for the exemption of a withholding tax imposed on dividend payments with a minimum participation of 10% and with a minimum participation period of one year. An information exchange provision included into the agreement allows for the automatic exchange of tax information.

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