1. For the purposes of thisConvention, the term "resident of a Contracting State"means any person who, under the laws of that State, is liable to taxtherein by reason of his domicile, residence, place of management,place of incorporation, or any other criterion of a similar nature,and also includes that State and any political subdivision or localauthority thereof. The term, however, does not include any person whois liable to tax in that State in respect only of income from sourcesin that State or of profits attributable to a permanent establishmentin that State or capital situated therein.
While the references and titles used in 102 are aligned to those used in the tax statute has been updated to cover both sets of terminology. A reference in statute to the ‘income statement’, for example, will take its normal accounting meaning. Furthermore, the reduced disclosure requirements permitted by section 1A of 102 wouldn’t typically have any effect on the business’s tax position.
3. Where a resident of the FederalRepublic of Germany derives income or owns capital which, inaccordance with the provisions of this Convention, may be taxed inthe United States or is exempt from United States tax under paragraph3 of Article 10 (Dividends), tax shall be determined as follows:
a) Except as provided in subparagraph b), the income or capital shall be excluded from the basis upon which German tax is imposed. The Federal Republic of Germany, however, retains the right to take into account in the determination of its rate of tax items of income and capital excluded under the provisions of this Convention. In the case of income from dividends the foregoing provisions shall apply only to such income from distributions of profits on corporate rights subject to corporate income tax under United States law as are paid to a company (not including partnerships) being a resident of the Federal Republic of Germany by a company being a resident of the United States at least 10 percent of the voting shares of which is owned directly by the German company. The exclusion provided by the first sentence of this subparagraph shall not apply to dividends paid by a U.S. Regulated Investment Company (RIC) or a U.S. Real Estate Investment Trust (REIT) and distributions that are deductible for United States tax purposes by the company distributing them. For the purposes of taxes on capital there shall also be excluded from the basis upon which German tax is imposed any shareholding the dividends of which, if paid, would be excluded, according to the two immediately foregoing sentences, from the basis upon which German tax is imposed.
If a business has monetary assets and monetary liabilities in the same foreign currency that are matched, nothing is taken to the profit and loss account for the exchange differences. However normally there will be an excess of assets over liabilities, or vice versa, which results in a residual exchange difference. It will be necessary to determine how much of the residual exchange difference is revenue and how much is capital as only revenue amounts are taken into account for Income Tax purposes. For more guidance see ’s Business Income Manual at and .
b) The determination reached by an arbitration board in the Proceeding shall be limited to a determination regarding the amount of income, expense or tax reportable to the Contracting States.
In determining the taxable income ofan individual who is a resident of the Federal Republic of Germanythere shall be allowed as a deduction in respect of alimony orsimilar allowances paid to an individual who is a resident of theUnited States the amount that would be allowed as a deduction if thatlast-mentioned individual were subject to unlimited tax liability inthe Federal Republic of Germany.
For purposes of paragraph 1 ofArticle 23, the "general principle hereof" means theavoidance of double taxation by allowing a credit for taxes imposedon items of income arising in the Federal Republic of Germany, asdetermined under the applicable United States source rules, asmodified by the Convention. While the details and limitations of thecredit pursuant to this paragraph may change as provisions of UnitedStates law change, any such changes must preserve a credit for Germantaxes imposed with respect to items of income that the FederalRepublic of Germany may tax pursuant to the Convention.
b) in respect of other taxes on income for taxes levied for taxable years or assessment periods beginning on or after 1 January of the calendar year following the year in which the notice of termination is given (but excluding any fiscal year commencing before such date); and
f) with respect to dividends, interest or royalties arising in the Federal Republic of Germany and beneficially owned by a company that is a resident of the United States, a company that is a resident of a member state of the European Union will be treated as satisfying the requirements of clause aa) B) of subparagraph e) for purposes of determining whether such United States resident is entitled to benefits under this paragraph if a payment of dividends, interest or royalties arising in the Federal Republic of Germany and paid directly to such resident of a member state of the European Union would have been exempt from tax pursuant to any directive of the European Union, notwithstanding that the income tax convention between the Federal Republic of Germany and that other member state of the European Union would provide for a higher rate of tax with respect to such payment than the rate of tax applicable to such United States company under Article 10 (Dividends), 11 (Interest), or 12 (Royalties) of this Convention.
3. If information is requested by aContracting State in accordance with this Article, the otherContracting State shall obtain the information to which the requestrelates in the same manner and to the same extent as if the tax ofthe first-mentioned State were the tax of that other State and werebeing imposed by that other State. If specifically requested by thecompetent authority of a Contracting State, the competent authorityof the other Contracting State shall, if possible, provideinformation under this Article in the form of depositions ofwitnesses and authenticated copies of unedited original documents(including books, papers, statements, records, accounts, andwritings), to the same extent such depositions and documents can beobtained under the laws and administrative practices of that otherState with respect to its own taxes.
1. The competent authorities of theContracting States shall exchange such information as is necessaryfor carrying out the provisions of this Convention and of thedomestic law of the Contracting States concerning taxes covered bythis Convention insofar as the taxation thereunder is not contrary tothis Convention. The exchange of information is not restricted byArticle 1 (Personal Scope). Any information received by a ContractingState shall be treated as secret in the same manner as informationobtained under the domestic laws of that State and shall be disclosedonly to persons or authorities (including courts and administrativebodies) involved in the assessment, collection, or administration of,the enforcement or prosecution in respect of, or the determination ofappeals in relation to the taxes covered by this Convention. Suchpersons or authorities shall use the information only for suchpurposes. They may disclose the information in public courtproceedings or in judicial decisions, unless the competent authorityof the Contracting State supplying the information raises anobjection.