汤头条

July 22, 1983

The Republic of the Philippines and the Federal Republic of Germany,

Desiring to conclude an Agreement for the Avoidance of Double Taxation with Respect to Taxes on Income and Capital,

Have agreed as follows:

ARTICLE 1

PERSONAL SCOPE

This Agreement shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2

TAXES COVERED

1. This Agreement shall apply to taxes on income and taxes on capital imposed on behalf of each Contracting State or of its Laender, political subdivisions or local authorities, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, as well as taxes on capital appreciation.

3. The existing taxes to which the Agreement shall apply are, in particular;

(a) in the Federal Republic of Germany;

the income tax (Einkommensteuer),

the corporation tax (Koerperschaftsteuer),

the capital tax (Vermoegensteuer) and

the trade tax (Gewerbesteuer)

(hereinafter referred to as "German tax");

(b) in the Republic of the Philippines:

the income tax

(hereinafter referred to as "Philippine tax").

4. The Agreement shall also apply to any identical or substantially similar taxes which are subsequently imposed in addition to, or in place of, the existing taxes. At the end of each year, the competent authorities of the Contracting States shall, if necessary, notify each other of substantial changes which have been made in their respective taxation laws

ARTICLE 3

GENERAL DEFINITIONS

1. In this Agreement, unless the context otherwise requires:

(a) the terms "a Contracting State" and "the other Contracting State" mean the Federal Republic of Germany or the Republic of the Philippines as the context requires, and, when used in a geographical sense, the territory in which the tax law of the State concerned is in force, in accordance with international law;

(b) the term "tax" means German tax or Philippine tax, as the context requires;

(c) the term "person" comprises an individual, an undivided estate, a trust and a company;

(d) the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes;

(e) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;

(f) the term "national means: 

(aa) in respect the Federal Republic of Germany all Germans in the meaning of paragraph 1, Article 116, of the Basic Law for the Federal Republic of Germany and all legal persons, partnerships and associations deriving their status as such from the law in force in the Federal Republic of Germany;

(bb) in respect of the Republic of the Philippines all citizens of the Philippines in accordance with its law and all legal persons, partnerships and associations deriving their status as such from the law in force in the Republic of the Philippines;

(g) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operand solely between places in the other Contracting State;

(h) the term "competent authority" means in the case of the Federal Republic of Germany the Federal Minister of Finance, and in the case of the Republic of the Philippines the Minister of Finance or his authorized representative.

2. As regards the application of the Agreement by a Contracting State any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the laws of that Contracting State relating to the taxes which are the subject of the Agreement.

ARTICLE 4

FISCAL DOMICILE

1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the law of that State, is liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature.

2. Where by reason of the provisions of paragraph 1 an Individual is a resident of both Contracting States, then this case shall be determined in accordance with the following rules:

(a) He shall be deemed to be a resident of the State in which he has a permanent home available to him. If he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests);

(b) If the State in which he has his centre of vita! interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode;

(c) If he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national;

(d) If he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1, a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated.

ARTICLE 5

PERMANENT ESTABLISHMENT

1. For the purposes of this Agreement the term "permanent establishment" means a fixed place of business in which the business of the enterprise is wholly or partly carried on.

2. The term "permanent establishment" shall include especially:

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop;

(f) a warehouse, in relation to a person providing storage facilities for others;

(g) a mine, quarry or other place of extraction of natural resources;

(h) a building site or construction or assembly project or supervisory activities in connection therewith, where such site, project or activity continues for a penod of more than six months.

3. The term "permanent establishment鈥� shall not be deemed to include:

(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise;

ARTICLE 6

INCOME FROM IMMOVABLE PROPERTY

1. Income from immovable property may be taxed in the Contracting State in which such property is situated.

2. The term "immovable property" shall be defined in accordance with the law of the Contracting State in which the property in question is situated. The term shall in any case include rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircrafts shall not be regarded as immovable property.

3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of professional services.

ARTICLE 7

BUSINESS PROFITS

1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

2. Where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. However, insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in this paragraph shall preclude such Contracting State from determining the profits to be taxed by such an apportionment as may be customary, the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles laid down in this Article.

3. In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.

4. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

5. For the purposes of this Article, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

6. Where profits include items of income which are dealt with separately in other Articles of this Agreement then the provisions of those Articles shall not be affected by the provisions of this Article.

ARTICLE 8

SHIPPING AND AIR TRANSPORT

1. Profits from the operation of ships or aircraft in international traffic derived by an enterprise of a Contracting State may be taxed in that State.

2. However, such profits may be taxed in the other Contracting State, but the tax so charged shall not exceed the lesser of

(a) the rate of 1陆 per cent applied on the gross revenue derived from sources within that State, or

(b) the lowest rate of Philippine tax applied on such profits derived by an enterprise of a third State.

3. The provisions of paragraphs 1 and 2 shall likewise apply in respect of participations in pools, in a joint business or in an international operation of ships or aircraft in international traffic.

ARTICLE 9

RELATED ENTERPRISES

Where

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

ARTICLE 10

DIVIDENDS

1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State,

2. However, such dividends may be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the law of that State, but the tax so charged shall not exceed:

(a) 10 per cent of the gross amount of the dividends if the recipient is a company (excluding partnerships) which owns directly at least 25 per cent of the capital of the Company paying the dividends:

(b) In other cases 15 per cent of the gross amount of dividends.

3. Notwithstanding the provisions of paragraph 2 German tax on dividends paid to a company being a resident of the Republic of the Philippines by a company being a resident of the Federal Republic of Germany, at least 25 per cent of the capital of which is owned directly or indirectly by the former company itself, or by it together with other persons controlling it or being under control with it, shall not exceed 15 per cent of the gross amount of such dividends as long as the rate of German corporation tax on distributed profits is lower than that on undistributed profits and the difference between those two rates is 15 percentage points or more.

4. The term "dividends" as used in this Article means income from shares, mining shares, founders' shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights assimilated to income from shares by the taxation law of the State of which the company making the distribution is a resident, and income derived by a sleeping partner from his participation as such and distributions on certificates of an investment-trust.

5. The provisions of paragraphs 1 to 3 shall not apply if the recipient of the dividends, being a resident of a Contracting State, has in the other Contracting State, of which the company paying the dividends is a resident, a permanent establishment with which the holding by virtue of which the dividends are paid is effectively connected. In such a case, the provisions of Article 7 shall apply.

6. Where a resident of the Federal Republic of Germany has a branch in the Republic of the Philippines, this branch may be subject to a branch profits remittance tax withheld at source in accordance with Philippine law. However, the tax so charged shall not exceed 10 per cent of the gross amount of the profits remitted by that branch to the head office.

ARTICLE 11

INTEREST

1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such interest may be taxed in the Contracting State in which it arises, and according to the law of that State, but the tax so charged shall not exceed:

(a) 10 per cent if such interest is paid: 

(i) in connection with the sale on credit of any industrial, commercial or scientific equipment, or

(ii) on any loan of whatever kind granted by a bank, or

(iii) in respect of public issues of bonds, debentures or similar obligations,

(b) 15 per cent of the gross amount of such interest in all other cases.

3. Notwithstanding the provisions of paragraph 2,

(a) interest arising in the Federal Republic of Germany and paid to the Philippine Government and the Central Bank of the Philippines shall be exempt from German tax;

(b) interest arising in the Republic of the Philippines and paid to the German Government, the Deutsche Bundesbank, the Kreditanstalt fuer Wiederaufbau or the Deutsche Gesellschaft fuer wirtschaftliche Zusammenarbeit (Entwicklungsgeseilschaft) shall be exempt from Philippine tax.

The competent authorities of the Contracting States shall determine by mutual agreement any other governmental institution to which this paragraph shall apply.

4. Notwithstanding the provisions of paragraph 2 of this Article, interest arising in a Contracting State shall be exempt from tax in that State if it is derived in respect of a loan made, guaranteed or insured by a governmental instrumentality of the other Contracting State as by "Hermes Deckung" in the case of the Federal Republic of Germany and by the Central Bank in the case of the Republic of the Philippines, or any other instrumentality as is specified and agreed in letters exchanged between the competent authorities of the Contracting States.

5. The term "interest" as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and debt-claims of every kind as well as all other income assimilated to income from money lent by the taxation law of the State from which the income is derived.

6. The provisions of paragraphs 1 and 2 shall not apply it the recipient of the interest, being a resident of a Contracting State, has in the other Contracting State in which the interest arises a permanent establishment with which the debt-claim from which the interest arises is effectively connected. In such a case, the provisions of Article 7 shall apply.

7. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a Land, a political subdivision or the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.

8. Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 12

ROYALTIES

1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2 However, such royalties may also be taxed in the Contracting State in which they arise, and according to the law of that State, out the tax so charged shall not exceed:

(a) 15 per cent of the gross amount of royalties arising from the use of, or the right to use any copyright of literary, artistic or scientific work including cinematograph films or tapes for television or broadcasting, or

(b) 10 per cent of the gross amount of royalties arising from the use of, or the right to use, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience.

For as long as the transfer of technology, under Philippine law, is subject to approval, the limitation of the tax rate mentioned under (b) shall, in the case of royalties arising in the Republic of the Philippines, only apply if the contract giving rise to such royalties has been approved by the Philippine competent authorities.

3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films or tapes for television or broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience.

4. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the royalties, being a resident of a Contracting State, has in the other Contracting State in which the royalties arise a permanent establishment with which the right or property giving rise to the royalties is effectively connected. In such a case, the provisions of Article 7 shall apply.

5. Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a Land, a political subdivision or a local authority thereof or a resident of that Slate. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.

6. Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the royalties paid, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 13

CAPITAL GAINS

1. Gains from the alienation of immovable property, as defined in paragraph 2 of Article 6, may be taxed in the Contracting State in which such property is situated.

2. Gains from the alienation of movable property forming part of the business properly of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing professional services, including such gains from the alienation of such a permanent establishment (alone or together with the whole enterprise) or of such a fixed base, may be taxed in the other State. However, gains from the alienation of ships and aircraft operating in international traffic and movable property pertaining to the operation of such ships and aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

3. Gains from the alienation of shares of a company which is a resident of a Contracting State may be taxed in that State.

4. Gains from the alienation of any property other than those mentioned in paragraphs 1 to 3 shall be taxable only in that Contracting State of which the alienator is a resident.

ARTICLE 14

INDEPENDENT PERSONAL SERVICES

1. Income derived by a resident of a Contracting State in respect of professional services or other independent activities of a similar character shall be taxable only in that State, unless:

(a) he has a fixed base available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or

(b) he is present in the other Contracting State for the purpose of performing his activities for a period or periods exceeding in the aggregate 120 days in the calendar year concerned, in which case only so much of the income as is attributable to the activities performed in that other State may be taxed in that other State.

2. The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

ARTICLE 15

DEPENDENT PERSONAL SERVICES

1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first mentioned State if

(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the calendar year concerned; and

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and

(c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other state

3. Notwithstanding the preceding provisions of this Article, declaration in respect of an employment as a member of the crew or complement, exercised aboard a ship or aircraft operating in international traffic may be taxed in the Contracting State in which the place of effective management the enterprise is situated.

ARTICLE 16

DIRECTORS' FEES

Doctors' fees or other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 17

ARTISTES AND ATHLETES

1. Notwithstanding the provisions of Articles 7, 14 and 15, income derived by public entertainers, such as theatre, motion picture, radio or television artistes, and musicians, and by athletes, from their personal activities as such or income derived from the furnishing by an enterprise of the services of such public entertainers or athletes, may be taxed in the Contracting State in which these activities are exercised.

2. The provisions of paragraph 1 shall not apply if the visit of public entertainers or athletes to a Contracting State is supported wholly or substantially from public funds of the other Contracting State, a Land, a political subdivision or a local authority thereof.

ARTICLE 18

SALARIES FROM GOVERNMENTAL FUNCTIONS

1. Subject to the provisions of Article 19, remuneration paid by, or out of funds created by a Contracting State, a Land, a political subdivision or a local authority thereof to any individual in respect of an employment shall be taxable only in that State. If the employment is exercised in the other Contracting State by a national of that State not being a national of the first-mentioned State, the remuneration shall be taxable only in that other State.

2. The provisions of Articles 15 and 16 shall apply to remuneration in respect of an employment in connection with any business carried on by a Contracting State, a Land, a political subdivision or a local authority thereof for the purpose of profits.

3. Remuneration paid to a specialist or volunteer, in accordance with, or in the implementation of an agreement between the Contracting States regarding technical cooperation, out of funds exclusively supplied by a Contracting State, Land, political subdivision or local authority thereof, shall be taxable only in that State.

ARTICLE 19

PENSIONS AND ANNUITIES

1. Pensions, annuities and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State unless such payments are made by a person who is a resident of the other Contracting State and such payments have been deducted as expenses in determining the profits of that person In that case, the payments may be taxed in the other Contracting State.

2. Notwithstanding the provisions of paragraph 1, pensions and other payments for past employment as well as annuities paid by or out of funds created by a Contracting State, a Land, a political subdivision, local authority or local administration thereof shall be taxable only in that State.

3. Pensions, annuities and other recurring or non-recurring payments which are paid to any individual by a Contracting State, a Land, a political subdivision or a local authority thereof as compensation for an injury or damage sustained as a result of hostilities or political persecution shall be taxable only in that State.

4. The term "pensions" as used in this Article means periodic payments made in consideration for past services rendered.

5. The term "annuity", as used in this Article, means a stated sum payable, under an obligation, periodically at stated times during life or during a specified or ascertainable period of time.

ARTICLE 20

TEACHERS AND RESEARCHERS

1. Remuneration which a professor or teacher, who is or immediately before was a resident of a Contracting State and who visits the other Contracting State for a period not exceeding two years for the purpose of carrying out advanced study or research or for teaching at a university, college, school or other educational institution, receives for such work shall not be taxed in that Contracting State.

2. This Article shall not apply to income from research if such research is undertaken not in the general interest but primarily for the private benefit of a specific person or persons.

ARTICLE 21

STUDENTS AND TRAINEES

1. An individual who was resident of a Contracting State immediately before visiting the other Contracting State and is temporarily present in that Contracting State solely as a student at a university, college, school or other similar educational institution or as a business apprentice (including in the case of the Federal Republic of Germany a Volontaer or a Praktikant) shall, from the date of his first arrival in that Contracting State in connection with that visit be exempt from tax in that Contracting State: 

(a) on all remittances from abroad for purposes of his maintenance, education or training, and

(b) for a period not exceeding in the aggregate five years, on any remuneration not exceeding 7 500 DM or the equivalent in Philippine currency for the calendar year for personal services rendered in that Contracting State with a view to supplementing the resources available to him for such purposes.

2. An individual who was a resident of a Contracting State immediately before visiting the other Contracting State and is temporarily present in that Contracting State solely for purpose of study, research or training as a recipient of a grant, allowance or award from a scientific, educational, religious or charitable organization or under a technical assistance program entered into by the Government of a Contracting State shall for a period not exceeding two years from the date of his first arrival in that Contracting State in connection with that visit be exempt from tax in that Contracting State on:

(a) the amount of such grant allowance or award;

(b) all remittances from abroad for the purposes of this maintenance, education or training; and

(c) any remuneration for personal services in that other Contracting State provided that such services are in connection with his study, research, training or incidental thereto.

3. An individual who was a resident of a Contracting State immediately before visiting the other Contracting State and is temporarily present in that Contracting State solely as a trainee for the purpose of acquiring technical, professional or business experience, shall for a period not exceeding two years from the date of his first arrival in that Contracting State in connection with that visit be exempt from tax in that Contracting State on:

(a) all remittances from abroad for purposes of his maintenance, education or training, and

(b) any remuneration not exceeding 7 500 DM or the equivalent in Philippine currency for the calendar year for personal services rendered in that Contracting State, provided such services are in connection with his studies or training or incidental thereto.

ARTICLE 22

OTHER INCOME

Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State except that if such income is derived from sources within the other Contracting State, it may also be taxed in that State in accordance with its laws.

ARTICLE 23

CAPITAL

1. Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.

2. Capital represented by movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or by movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, may be taxed in that other State.

3. Capital represented by ships and aircraft operated in international traffic and by movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State.

ARTICLE 24

RELIEF FROM DOUBLE TAXATION

1. Tax shall be determined in the case of a resident of the Federal Republic of Germany as follows: 

(a) Unless the provisions of subparagraph (b) apply, there shall be excluded from the basis upon which German tax is imposed, any item of income arising in the Republic of the Philippines and any item of capital situated within the Republic of the Philippines which, according to this Agreement, may be taxed in the Republic of the Philippines. The Federal Republic of Germany, however, retains the right to take into account in the determination of its rate of tax the items of income and capital so excluded.

In the case of income from dividends the foregoing provisions shall apply only to such dividends 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 Republic of the Philippines at least 25 per cent of the capital of which is owned directly by the German company.

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 which are excluded or, if paid, would be excluded according to the immediately foregoing sentence from the basis upon which German tax is imposed.

(b) Subject to the provisions of German tax law regarding credit for foreign tax, there shall be allowed as a credit against German income and corporation tax payable in respect of the following items of income arising in ;he Republic of the Philippines, the tax paid under the laws of the Philippines and in accordance with this Agreement on: 

(aa) income to which Article 8 applies;

(bb) dividends, not dealt with in subparagraph (a);

(cc) interest, as defined in paragraph 5 of Article 11;

(dd) royalties, as defined in paragraph 3 of Article 12;

(ee) gains to which paragraph 3 of Article 13 applies;

(ff) remuneration to which Article 16 applies;

(gg) income to which Article 17 applies;

(hh) income to which the second sentence of paragraph 1 of Article 19 applies;

(ii) income to which Article 22 applies.

(c) For the purpose of credit referred to in subparagraph (b) the Philippine tax shall be deemed to be

(aa) in the case of dividends referred to in (bb) of subparagraph (b), 20 percent of the gross amount of the dividends;

(bb) in the case of interest referred to in (cc) of subparagraph (b), 15 per cent of the gross amount of the interest;

(cc) in the case of royalties for which the tax is reduced to 10 or 15 per cent according to paragraph 2 of Article 12, 20 per cent of the gross amount of such royalties.

2. Subject to the provisions of the laws of the Republic of the Philippines relating to the allowance as a credit against Philippine tax of tax paid in a territory outside the Republic of the Philippines, German tax payable under the laws of the Federal Republic of Germany and in accordance with this Agreement whether directly or by deduction, in respect of income from sources within the Federal Republic of Germany shall be allowed, where similar tax is imposed in the Republic of the Philippines, as a credit against Philippine tax payable in respect of that income. The deduction shall not, however, exceed that part of the Philippine income tax, as computed before the deduction is given which is appropriate to the income which may be taxed in the Federal Republic of Germany.

ARTICLE 25

NON-DISCRIMINATION

1. The nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected.

2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities.

This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

3. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of that first-mentioned State are or may be subjected.

4. In this Article the term "taxation" means taxes of every kind and description.

ARTICLE 26

MUTUAL AGREEMENT PROCEDURE

1. Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with this Agreement, he may, notwithstanding the remedies provided by the national laws of those States, present his case to the competent authority of the Contracting State of which he is a resident.

2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at an appropriate solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with this Agreement.

3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of applying the provisions of this Agreement.

ARTICLE 27

EXCHANGE OF INFORMATION

1. The competent authorities of the Contracting States shall exchange such information as is necessary for the carrying out of this Agreement and the prevention of fraud or fiscal evasion, with respect to the provisions of this Agreement. Any information so exchanged shall be treated as secret and shall not be disclosed to any persons, authorities or courts other than those concerned with the assessment or collection of the taxes which are the subject of this Agreement or the determination of appeals or the prosecution of offenses in relation thereto

2. In no case shall the provisions of paragraph 1 be construed so as to impose on one of the Contracting States the obligation;

(a) to carry out administrative measures at variance with the laws or the administrative practice of that or of the other Contracting State;

(b) to supply particulars which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy.

ARTICLE 28

DIPLOMATIC OR CONSULAR OFFICIALS

1. Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.

2. Insofar as, due to fiscal privileges granted to diplomatic missions or consular posts under the general rules of international law or under the provisions of special international agreements, income is not subject to tax in the receiving State, the right to tax shall be reserved to the sending State.

3. For the purposes of this Agreement, members of a diplomatic mission or consular posts of a Contracting State in the other Contracting State who are nationals of the sending State, shall be deemed to be residents of the sending State if they are subjected therein to the same obligations in respect of taxes on income as are residents of that State.

ARTICLE 29

INCLUSION OF LAND BERLIN

This Agreement shall also apply to Land Berlin, provided that the Government of the Federal Republic of Germany does not make a contrary declaration to the Government of the Republic of the Philippines within three months of the date of entry into force of this Agreement.

ARTICLE 30

ENTRY INTO FORCE

1. This Agreement shall be ratified and the instruments of ratification shall be exchanged at Bonn as soon as possible.

2. This Agreement shall enter into force one month after the date of the exchange of the instruments of ratification and its provisions shall have effect: 

(a) in respect of taxes withheld at source on amounts paid after December 31st of the calendar year in which the exchange of instruments of ratification takes place; and

(b) in respect of other taxes for taxation years beginning on or after the first day of January of the calendar year next following that in which the exchange of instruments of ratification takes place.

ARTICLE 31

TERMINATION

This Agreement shall continue in effect indefinitely but either Contracting State may, on or before June 30 in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give to the other Contracting State through diplomatic channels written notice of termination and in such event the Agreement shall cease to have effect:

(a) in respect of taxes withheld at source on amounts paid on or after the first day of January of the calendar year next following that in which the notice is given; and

(b) in respect of other taxes for taxation years beginning on or after the first day of January of the calendar year next following that in which the notice is given.

(Sgd.) CESAR VIRATA

For the Republic of the Philippines

(Sgd.)

For the Federal Republic of Germany

PROTOCOL

The Republic of the Philippines and the Federal Republic of Germany

have agreed at the signing at Manila on 22 July 1983 of the Agreement between the two States for the avoidance of double taxation with respect to taxes on income and capital upon the following provisions which shall form an integral part of the said Agreement:

1. Nothing in this Agreement shall be construed as depriving the Republic of the Philippines of the right to tax its own citizens who are residents of the Federal Republic of Germany in accordance with the Laws of the Philippines but the Federal Republic of Germany shall not be bound to give credit for such tax. This paragraph shall cease to have effect with respect to taxation years beginning after the last day of the calendar year in which an Agreement concluded between the Republic of the Philippines and any third State in which the Republic of the Philippines relinquishes its right to tax its citizens resident in the State, enters into force.

2. In relation to Article 5, if an enterprise of a Contracting State carries out activities in the other Contracting State by furnishing services, including consultancy services, through an employee or other personnel, it shall be considered to have a permanent establishment in that Contracting State only if such services continue (for the same or a connected project) within that Contracting State for a period or periods aggregating more than six months within any twelve-month period.

No permanent establishment is assumed if the services, including the provision of equipment, are furnished in a Contracting State by enterprises of the other Contracting State, including consultancy firms, in accordance with, or in the implementation of, an agreement between the Contracting States regarding technical cooperation.

3. In respect of paragraph 1 of Article 7, profits derived from the sale of goods or merchandise of the same or similar kind as those sold, or from other business activities of the same or similar kind as those effected, through that permanent establishment, may be considered attributable to that permanent establishment if it is proved that this transaction has been resorted to in order to avoid taxation in the Contracting State where the permanent establishment is situated.

In respect of paragraph 3 of Article 7, no such deduction shall be allowed in respect to amounts paid or charged (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of: 

(a) royalties, fees or other similar payments in return for the use of patents or other rights;

(b) commission, for specific services performed or for management; and

(c) interest on moneys lent to the permanent establishment, except in the case of a banking institution.

4. Notwithstanding the provisions of Articles 10 and 11, dividends and interest may be taxed in the Contracting State in which they arise, and according to the law of that State,

(a) if they are derived from rights or debt-claims carrying a right to participate in profits (including income derived by a sleeping partner from his participation as such, from a "partiarisches Darlehen" and from "Gewinnobligationen" within the meaning of the tax law of the Federal Republic of Germany) and

(b) under the condition that they are deductible in the determination of profits of the debtor of such income.

5. In respect of Article 1 7, paragraph 2 shall likewise apply if the visit of public entertainers or athletes is supported by a non-profit organization, as determined by the competent authorities of both Contracting States.

6. The provisions of subparagraph (a) of paragraph 1 of Article 24 shall not apply to the profits of, and to the capital represented by movable and immovable property forming part of the business property of, a permanent establishment and to the gains from the alienation of such property; to dividends paid by, and to the shareholding in, a company; provided that the resident of the Federal Republic of Germany concerned does not prove that the receipts of the permanent establishment or company are derived exclusively or almost exclusively

(a) from producing or selling goods or merchandise, giving technical advice or rendering engineering services, or doing banking or insurance business, within the Republic of the Philippines, or

(b) from dividends paid by one or more companies, being residents of the Republic of the Philippines, more than 25 percent of the capital of which is owned by the first-mentioned company, which themselves derive their receipts exclusively or almost exclusively from producing or selling goods or merchandise giving technical advice or rendering engineering services, or doing banking or insurance business, within the Republic of the Philippines.

In such a case Philippine tax payable under the laws of the Republic of the Philippines and in accordance with this Agreement on the above-mentioned items of income and capital shall, subject to the provisions of German tax law regarding credit for foreign tax, be allowed as a credit against German income or corporation tax payable on such items of income, or against German capital tax payable on such items of capital.

7. The tax rate limitation provided for in paragraph 2, subparagraph (a) of Article 10 does not apply to income to which, according to No. 6 of the Protocol, only the provisions of subparagraph (b) of paragraph 1 of Article 24 shall be applied.

8. Where a company being a resident of the Federal Republic of Germany distributes income derived from sources within the Republic of the Philippines, paragraph 1 of Article 24 shall not preclude the compensatory imposition of corporation tax on such distributions in accordance with the provisions of German tax law.

9. With respect to Article 25:

(a) This provision shall not be construed as obliging the Republic of the Philippines to grant to German nationals the tax incentives provided tor in the Omnibus Investment Code (Presidential Decree No. 1 769);

(b) Except where the provisions of Article 9, paragraph 8 of Article 11, or paragraph 6 of Article 1 2 apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.
 

(Sgd.) CESAR VIRATA

For The Republic of the Philippines

(Sgd.)

For the Federal Republic of Germany

  ERRATUM

TO THE

AGREEMENT BETWEEN THE REPUBLIC OF THE PHILIPPINES AND THE FEDERAL REPUBLIC OF GERMANY FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND CAPITAL. 

1. Article 7, paragraph 2, 15th line ,

The comma should be replaced by semicolon after the word "customary".

2. Article 25, paragraph 3, second line

The word "of" should be replaced by the word "or" after the word "directly", so that it will read directly or indirectly ...''.

3. Protocol, paragraph 6, subparagraph (b), 6th line

A comma must be inserted between the words "merchandise" and "giving".

(Sgd.) CESAR VIRATA

For the Republic of the Philippines

(Sgd.)

For the Federal Republic of Germany