Article 23 (Relief from Double — U.S. Income Tax Treaty

Article substituted:

“Article 23 Relief from Double Taxation

In accordance with the provisions and subject to the limitations of the law of the

United States (as it may be amended from time to time without changing the general

principle hereof), the United States shall allow to a resident or citizen of the United States

as a credit against the United States tax on income:

a) the income tax paid or accrued to the Federal Republic of Germany by or on behalf of

such resident or citizen; and

b) in the case of a United States company owning at least 10 percent of the voting stock

of a company that is a resident of the Federal Republic of Germany and from which the

United States company receives dividends, the income tax paid or accrued to the Federal

Republic of Germany by or on behalf of the payer with respect to the profits out of which

the dividends are paid.

For the purposes of this paragraph, the taxes referred to in subparagraph b) of paragraph 1

of Article 2 (Taxes Covered) and paragraph 2 of Article 2, other than the capital tax

( Vermögensteuer ), shall be considered income taxes.

For the purposes of applying paragraph 1 of this Article, an item of gross income, as

determined under the laws of the United States, derived by a resident of the United States

that, under this Convention, may be taxed in the Federal Republic of Germany shall be

deemed to be income from sources in the Federal Republic of Germany.

Where a resident of the Federal Republic of Germany derives income or owns capital

which, in accordance with the provisions of this Convention, may be taxed in the United

States or is exempt from United States tax under paragraph 3 of Article 10 (Dividends),

tax shall be determined as follows:

a) Except as provided in subparagraph b), the income or capital shall be excluded from

the basis upon which German tax is imposed. The Federal Republic of Germany,

however, retains the right to take into account in the determination of its rate of tax

items of income and capital excluded under the provisions of this Convention. In

the case of income from dividends the foregoing provisions shall apply only to such

income from distributions of profits on corporate rights subject to corporate income

tax under United States law 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 United States at least 10 percent of the voting shares of which is owned

directly by the German company. The exclusion provided by the first sentence of

this subparagraph shall not apply to dividends paid by a U.S. Regulated Investment

Company (RIC) or a U.S. Real Estate Investment Trust (REIT) and distributions

that are deductible for United States tax purposes by the company distributing

them. 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 of which,

if paid, would be excluded, according to the two immediately foregoing sentences,

from the basis upon which German tax is imposed.

b) There shall be allowed as a credit against German tax on income, subject to the

provisions of German tax law regarding credit for foreign tax, the United States tax

paid in accordance with the law of the United States and with the provisions of this

Convention on the following items of income:

aa) income from dividends within the meaning of Article 10 (Dividends) to which

subparagraph a) does not apply;

bb) gains to which Article 13 (Gains) applies provided such gains are taxable in the

United States by reason only of subparagraph b) of paragraph 2 of Article 13;

cc) income to which Article 16 (Directors' Fees) applies;

dd) income to which Article 17 (Artistes and Athletes) applies;

ee) income which would, but for Article 28 (Limitation on Benefits), remain

exempt from United States tax under this Convention.

For the purposes of this paragraph, income, profit or gain derived by a resident of

the Federal Republic of Germany that, under this Convention, may be taxed in the

United States shall be deemed to be income from sources within the United States.

a) Notwithstanding subparagraph a) of paragraph 3, double taxation shall be avoided

by a credit as provided for in subparagraph b) of paragraph 3, if income or capital

would be subject to double taxation due to the placement of such income or capital

under different provisions of the Convention and this conflict cannot be settled by a

procedure pursuant to Article 25 (Mutual Agreement Procedure).

b) The provisions of subparagraph a) of paragraph 3 shall not apply to income or

capital where the United States applies the provisions of the Convention to exempt

such income or capital from tax, or applies paragraphs 2 or 3 of Article 10

(Dividends) to such income, or may under the provisions of the Convention tax

such income or capital but is prevented from doing so under its laws.

c) The provisions of subparagraph b) and not the provisions of subparagraph a) of

paragraph 3 shall apply to items of income or capital of which the Federal Republic

of Germany has, after due consultation, notified the United States through

diplomatic channels. In such a case, the provisions of subparagraph b) shall apply

for any taxable year following the year of such notification.

Where a United States citizen is a resident of the Federal Republic of Germany:

a) With respect to items of income not excluded from the basis of German tax under

paragraph 3 that are exempt from United States tax or that are subject to a reduced

rate of United States tax when derived by a resident of the Federal Republic of

Germany who is not a United States citizen, the Federal Republic of Germany shall

allow as a credit against German tax, subject to the provisions of German tax law

regarding credit for foreign tax, only the tax paid, if any, that the United States may

impose under the provisions of this Convention, other than taxes that may be

imposed solely by reason of citizenship under paragraph 4 of Article 1 (General

Scope);

b) For purposes of computing United States tax, the United States shall allow as a

credit against United States tax the income tax paid to the Federal Republic of

Germany after the credit referred to in subparagraph a); the credit so allowed shall

not reduce that portion of the United States tax that is creditable against the German

tax in accordance with subparagraph a); and

c) For the exclusive purpose of relieving double taxation in the United States under

subparagraph b), items of income referred to in subparagraph a) shall be deemed

to arise in the Federal Republic of Germany to the extent necessary to avoid

double taxation of such income under subparagraph b).”