German Double Taxation Avoidance Treaties and Agreements

German Double Taxation Avoidance Agreements

Updated on Saturday 21st August 2021

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What are double tax treaties in Germany?

In order to avoid the double taxation of profits in Germany and in the country of origin of the foreign investors, there are double tax treaties signed all over the year between these countries. The avoidance can be made through exemption or through credit. The first method consists in not charging the profits at all in Germany, while the other one consist in charging it but granting a refund on the charged amounts. 

Taxes in Germany

The withholding taxes on dividends, interests and royalties paid to a non-resident in Germany are 25%, 25% and 15% and due to the provisions of the double tax treaties can be exempt or minimized.
Every agreement has provisions regarding the tax information exchange between the states, in order to avoid the tax frauds produced by the non-payment of the specific taxes in the country of origin and in Germany. Besides the agreements there are also tax information exchange agreements between states in order to avoid this.
German VAT registration is one of the main steps in opening a business in this country.

Procedure to follow in order to avoid double taxation in Germany

In order to beneficiate from the regulations of the double tax treaties is necessary to bring evidence that the company is already paying taxes in the country of origin. Usually a tax certificate is necessary.
Germany has so far signed agreements of taxation avoidance with: Algeria, Argentina, Armenia, Australia, Austria, Azerbaijan, Bangladesh, Belarus, Belgium, Bolivia, Bosnia and Herzegovina, Bulgaria, Canada, Croatia, China, Cyprus, Czech Republic, Denmark, Ecuador, Egypt, Estonia, Finland, France, Georgia, Ghana, Greece, Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Ivory Coast, Jamaica, Japan, Kazakhstan, Kenya, Korea, Kuwait, Kyrgyzstan, Latvia, Liberia, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Mauritius, Mexico, Moldova, Mongolia, Morocco, Namibia, Netherlands, New Zealand, Norfolk Island, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Syria, Tajikistan, Thailand, Trinidad, Tunisia, Turkey, Turkmenistan, Ukraine, United Arab Emirates, united Kingdom, United States of America, Uruguay, Uzbekistan, Venezuela, Vietnam, Zambia and Zimbabwe. 
Many drafts are still waiting to be signed; in fact, the list is growing every year so is necessary to check the German Ministry of Finance (bundesfinanzministerium) official site in order to see if there are any changes in the status of the list of treaties.