The Income Tax Treaty (2015) between Australia and Germany has been entered into force on 7 December 2016.
The treaty generally applies in Germany from 1 January 2017 and in Australia from the following dates: For withholding tax on income that is derived by a non-resident from 1 January 2017, for fringe benefits tax from 1 April 2017 and for other Australian taxes from 1 July 2017.
According to the new treaty the maximum rates of withholding tax are:
-15% on dividends in general; 5% on dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the voting power of the company paying the dividends throughout a 6-month period that includes the day of payment of the dividend; 0% on dividend payments if the beneficial owner of the dividends is a company (other than a partnership) that is a resident of the other contracting state that has held directly shares representing 80% or more of the voting power of the company paying the dividends for a 12-month period ending on the date the dividend is declared, subject to the limitation of benefit (LOB) clause in article 10(3);
-10% of interest, subject to exemptions for independent financial institutions and certain governmental bodies. The exemption for financial institutions includes an anti-avoidance rule dealing with back-to-back loans; and
–5% on royalties.
From these dates, the new treaty generally replaces the Australia – Germany Income and Capital Tax Treaty (1972).
