Canada And Germany Sign Double Tax Treaty

by Lisa Ugur, Tax-news.com, London

26 April 2001

Canadian Finance Minister Paul Martin announced last week the signing of an agreement between Canada and Germany for the avoidance of double taxation and the prevention of fiscal evasion.

Under the agreement, a withholding tax of 5 per cent will apply to dividends paid to a company that controls at least 10 per cent of the voting power in the company paying the dividends. A withholding tax of 15 per cent will apply to all other dividend payments; and a withholding tax of 10 per cent will apply to interest and royalty payments. Some exemptions apply to certain types of payment of interest, copyright royalties and royalties in respect of computer software, patents and know-how. In addition, the agreement provides for mutual assistance in the collection of each country’s taxes.

Canada and Germany are to notify each other of the completion of the procedures required for bringing the agreement into force, and it will enter into force on the day the last notification is received.

The provisions of the agreement will apply, in the case of withholding tax, from January 1 2001. In the case of other taxes, the date for the provisions of the agreement to apply is not yet confirmed. Once in force, the new agreement between Canada and Germany will replace the existing one which was signed in July 1981.

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