Canada-Germany Tax Agreement Act, 1982 (S.C. 1980-81-82-83, c. 156)

Canada and the Federal Republic of Germany have agreed at the signing at Berlin on April 19, 2001 of the Agreement between the two States for the Avoidance of Double Taxation with respect to Taxes on Income and Certain other Taxes, the Prevention of Fiscal Evasion and the Assistance in Tax Matters, on the following provisions:

• 1 With reference to Article 4, paragraph 1, it is understood that the term resident of a Contracting State includes a person that is liable to tax on world income even if that person is liable to tax on capital only on capital situated in that State.

• 2 With reference to Article 6, the term immovable property shall include an interest in mineral deposits, sources and other natural resources and an option in respect of immovable property.

• 3 With reference to Article 10, paragraph 2, income derived from rights or debt-claims participating in profits (including in the Federal Republic of Germany income of a “stiller Gesellschafter” from the sleeping partner’s participation as such or from a “partiarisches Darlehen” and “Gewinnobligationen”) that is deductible in determining the profits of the debtor may be taxed in the Contracting State in which it arises according to the laws of that State.

• 4 With reference to Article 12, paragraph 2, the term gross amount does not include turnover taxes.

• 5 With reference to income taxable in accordance with Article 18, paragraph 1,

  • (a) the rate of Canadian tax charged on periodic pension payments derived from sources within Canada shall not exceed the lesser of:

    • (aa) 15 per cent of the gross amount of the payment, and

    • (bb) the rate determined by reference to the amount of tax that the recipient of the payment would otherwise be required to pay for the year on the total amount of the periodic pension payments received by the individual in the year, if the individual were resident in Canada,

  • (b) German tax shall be levied on pensions derived from sources within the Federal Republic of Germany only if they are paid by the Federal Republic of Germany, a “Land”, a political subdivision or a local authority thereof.

• 6 With reference to Article 18, paragraph 2, the rate of tax charged by a Contracting State on annuities derived from sources within that State shall not exceed 15 per cent of the taxable portion of the payment. However, this limitation shall not apply to lump-sum payments arising on the surrender, cancellation, redemption, sale or other alienation of an annuity, or to payments of any kind under an annuity contract the cost of which was deductible, in whole or in part, in computing the income of any person who acquired the contract.

• 7 With reference to Article 18, paragraph 3, subparagraph (c), the competent authority of a Contracting State shall notify the competent authority of the other Contracting State of changes made to the amount of social security benefits excluded from the taxable income of a resident of the first-mentioned State receiving such benefits.

• 8 With reference to Article 18, paragraph 3, subparagraph (d), in determining the taxable income of an individual who is a resident of the Federal Republic of Germany there shall be allowed in respect of alimony or similar allowances paid to an individual who is a resident of Canada the amount that would be allowed if that last-mentioned individual were subject to tax in the Federal Republic of Germany.

• 9 With reference to Article 23, paragraph 2, and Article 25, where a difference of qualification or attribution of income in Canada and the Federal Republic of Germany, not removed under a mutual agreement procedure according to Article 25,

  • (a) would result in double taxation of such income, the Federal Republic of Germany shall eliminate such double taxation by the granting of a credit in accordance with the principles contained in Article 23, paragraph 2, subparagraph (b);

  • (b) would result in an exemption or a relief of such income from Canadian tax and an exemption from German tax, the Federal Republic of Germany shall not grant, with respect to such income, an exemption within the meaning of Article 23, paragraph 2, subparagraph (a) but shall grant a credit in accordance with the principles contained in Article 23, paragraph 2, subparagraph (b).

• 10 With reference to Article 23 and Article 25, the Federal Republic of Germany shall avoid double taxation by a tax credit as provided for in Article 23, paragraph 2, subparagraph (b) and not by a tax exemption under Article 23, paragraph 2, subparagraph (a), if the Federal Republic of Germany has, after due consultation and subject to the limitations of its internal law, notified Canada through diplomatic channels of other items of income to which it intends to apply this paragraph. A notification made under this paragraph shall have effect from the day the notification is received.

• 11 With reference to Article 26, it is understood that if information is requested by a Contracting State in accordance with that Article, the other Contracting State shall endeavour to obtain the information to which the request relates in the same way as if its own taxation were involved notwithstanding the fact that the other State does not, at that time, need such information.

• 12 With reference to the Agreement,

  • (a) if in the Federal Republic of Germany the taxes on dividends, interest, royalties or other items of income are levied on a resident of Canada by deduction at source, then the right of the Federal Republic of Germany to apply the deduction of tax at the rate provided for under its domestic law shall not be affected by the provisions of the Agreement; the tax so deducted at source shall be refunded upon application by the taxpayer to the extent that it is reduced or eliminated under the Agreement;

  • (b) refund applications must be submitted by the end of the fourth year following the calendar year in which the tax that was deducted at source was assessed on the dividends, interest, royalties or other items of income; and

  • (c) the Federal Republic of Germany may require an administrative certification by the competent authority of Canada that the taxpayer is a resident of Canada.