Japan and Germany sign tax treaty

Japan and Germany on December 17 signed a tax treaty, wholly amending the countries’ 1967 tax treaty.

Under the treaty, withholding tax on interest and royalties is reduced to zero and withholding tax on dividends is zero percent for holdings of least 25 percent for 18 months, 5 percent for holdings of at least 10 percent for 6 months, and 15 percent in other cases.

Consistent with OECD/G20 BEPS project agreements, the preamble of the treaty states that the treaty should not be used for  tax avoidance or treaty shopping and the treaty includes as principal purpose test to prevent of treaty abuse.

The treaty also provides for arbitration of tax disputes and for assistance in the collection of taxes.

See:

•  Treaty

• Key Points of Tax Agreement with Germany