DT7904 - Double Taxation Relief Manual: Germany, Federal Republic of: treaty summary
The table summarises the provisions of the treaty in force. Where a percentage rate is shown, this rate is the ‘treaty rate’ and does not reflect taxes chargeable under the domestic law of either state before relief is given under the provisions of the treaty. The ‘treaty rate’ is the maximum rate at which the UK and Germany are permitted to tax income in the relevant categories under the treaty. Rates chargeable under the domestic law of either state may be higher or lower.
In all cases other conditions for relief (e.g. beneficial ownership) will have to be met before relief is due under the treaty. The text of the treaty itself should be consulted for the full details. The text of the treaty can be found on gov.uk.
Subject | Comments | Article |
|---|---|---|
Portfolio dividends | 15% (Note 1 and 2) | 10 |
Dividends on direct investments | 5% | 10 |
Conditions for lower rate on dividends on direct investments | The beneficial owner must be a company which holds directly at least 10% of the capital of the payer | 10 |
Property income dividends | 15% | 10 |
Interest | 0% (Note 2) | 11 |
Royalties | 0% | 12 |
Government pensions | Taxable only in Germany unless the individual is a resident and national of the UK | 18 |
Other pensions | Taxable only in the UK (Note 3 and 4) | 17 |
Arbitration | Yes | 21 |
Note 1: dividends beneficially owned by a UK pension scheme are taxable in Germany at a rate not exceeding 10%.
Note 2: The convention provides tax deductible interest and dividends arising in Germany that carry a right to participate in profits may be taxable in Germany. Interest and dividends carrying a right to participate in profits include income:
- derived by a silent partner (“stiller Gesellschafter”) from their participation as such
- from a loan with an interest rate linked to borrower’s profit (“partiarisches Darlehen”)
- from profit sharing bonds (“Gewinnobligationen”) within the meaning of the tax law of Germany
Note 3: Pensions paid to a UK resident will be taxable only in Germany where that pension is attributable in whole or in part to contributions which, for a period of more than 15 years, either:
- did not form part of taxable income in Germany
- were tax deductible in Germany
- were tax relieved in some way in Germany
The provisions of Article 17(3) will not apply if Germany does not effectively tax the pension, if it has already clawed back the tax relief given for contributions or if the 15 year condition is fulfilled in both the UK and Germany.
Note 4: German social security pensions are taxable only in Germany and are not taxable in the UK.