Germany - Japan Double Tax Treaty

Japanese investors who are interested in opening a company in Germany or to get involved in trading activities with this country can benefit from the provisions of the double taxation agreement (DTA) signed by the two states. It is important to know that Germany and Japan signed an updated version of the treaty, which should become effective starting with 1st of January 2017. Our team of German attorneys can provide an in-depth presentation on the taxes covered by the agreement and on the main changes established by the two parties. 

 

 

Germany and Japan first signed a treaty for the avoidance of double taxation applicable to natural persons and legal entities, tax residents of the two states, in 1967. The treaty was modified in 1979, and later on, in 1983. Due to the fact that the provisions of the agreement became outdated, the Japanese and German authorities have recently made a new amendment, which will improve the benefits of the current document; our team of German lawyers can offer more details in this sense. 

 

 

Japanese businessmen who want to set up a company in Germany should know that the new provisions of the treaty will provide more benefits than the current DTA, as several taxes have been lowered.  The representatives of the two states signed the revised version of the treaty on the 17th of December 2015, introducing new regulations that reflect the current legal view of the Organisation for Economic Cooperation and Development (OECD). 

 

One of the main aspects refers to the elimination (or reduction) of the withholding taxes, applicable to dividends, royalties and interests. The withholding tax on royalties and interest are no longer applicable, while the withholding tax on dividends will be imposed as follows: 

 

• 0% if the shareholder owns 25% of the voting rights for a period longer than 18 months;

• 5% if the shareholders owns 10% of the voting rights for minimum 6 months;

• a rate of 15% is applicable in other situations. 

 

Businessmen who are interested in receiving more details on the new double taxation treaty signed by Germany and Japan can address to our German law firm for legal assistance.