ARTICLE XVI — U.S. Income Tax Treaty

The Protocol to the Convention is amended by deleting paragraphs 1 through 28 and

replacing them with the following paragraphs:

“ 1. WITH REFERENCE TO SUBPARAGRAPH b) OF PARAGRAPH 4 OF ARTICLE 1 (GENERAL SCOPE)

The term "long-term resident" shall mean any individual who is a lawful permanent

resident of the United States in eight or more taxable years during the preceding 15

taxable years. In determining whether the threshold in the preceding sentence is met, an

individual shall not be treated as a lawful permanent resident of the United States for any

taxable year in which such individual is treated as a resident of a country other than the

United States under the provisions of a tax treaty of the United States and the individual

does not waive the benefits of such treaty provided by the United States to a resident of

the other country. Consequently, if during each of the 15 taxable years preceding the loss

of his status as a lawful permanent resident an individual was a resident of the Federal

Republic of Germany (as determined under Article 4 (Residence)) and claimed the

benefits provided by the United States to a resident of the Federal Republic of Germany,

the individual shall not be considered a long-term resident.

WITH REFERENCE TO PARAGRAPH 1 OF ARTICLE 4 (RESIDENCE)

a) The Federal Republic of Germany shall treat a United States citizen or an alien

lawfully admitted for permanent residence (a “green card” holder) as a resident of the

United States only if such person has a substantial presence, permanent home, or habitual

abode in the United States.

b) It is understood that a German Investment Fund and a German

Investmentaktiengesellschaft (collectively referred to as Investmentvermögen ) to which

the provisions of the Investment Act ( Investmentgesetz ) apply are residents of the

Federal Republic of Germany and that a U.S. Regulated Investment Company (RIC) and

a U.S. Real Estate Investment Trust (REIT) are residents of the United States.

WITH REFERENCE TO ARTICLE 5 (PERMANENT ESTABLISHMENT) A resident of

a Contracting State that performs in the other Contracting State concerts, theatrical or

artistic performances, or similar shows and revues and that may not be taxed in that other

State under the provisions of Article 17 (Artistes and Athletes) shall not be deemed to

have a permanent establishment in that State if its presence does not exceed in the

aggregate 183 days in the calendar year concerned.

WITH REFERENCE TO ARTICLE 7 (BUSINESS PROFITS)

It is understood that the business profits to be attributed to a permanent establishment

shall include only the profits derived from the assets used, risks assumed, and activities

performed by the permanent establishment. The principles of the OECD Transfer

Pricing Guidelines will apply for purposes of determining the profits attributable to a

permanent establishment, taking into account the different economic and legal

circumstances of a single entity. Accordingly, any of the methods described therein as

acceptable methods for determining an arm’s-length result may be used to determine the

income of a permanent establishment so long as those methods are applied in accordance

with the Guidelines. In particular, in determining the amount of attributable profits, the

permanent establishment shall be treated as having the same amount of capital that it

would need to support its activities if it were a distinct and separate enterprise engaged in

the same or similar activities. With respect to financial institutions other than insurance

companies, a Contracting State may determine the amount of capital to be attributed to a

permanent establishment by allocating the institution's total equity between its various

offices on the basis of the proportion of the financial institution's risk-weighted assets

attributable to each of them. A financial institution may determine the amount of the

capital attributed to its permanent establishment using its risk weighted assets only if it

risk weights its assets in the ordinary course of its business.

WITH REFERENCE TO PARAGRAPHS 1 AND 2 OF ARTICLE 7 (BUSINESS PROFITS) AND PARAGRAPH 3 OF ARTICLE 13 (GAINS)

For the implementation of paragraphs 1 and 2 of Article 7 and paragraph 3 of Article 13

any income, gain, or expense attributable to a permanent establishment is taxable or

deductible in the Contracting State where such permanent establishment is situated even

if the payments are deferred until such permanent establishment ceases to exist. Nothing

in the preceding sentence shall prevent the application to such deferred payments of rules

regarding the accrual of income and expenses according to the domestic law of a

Contracting State.

WITH REFERENCE TO ARTICLE 7 (BUSINESS PROFITS) AND ARTICLE 13 (GAINS)

Gains from the alienation of movable property that at any time formed part of the

business property of a permanent establishment that a resident of one Contracting State

has or had in the other Contracting State may be taxed by that other State only to the

extent of the gain that accrued during that time. Notwithstanding any provision of Article

7 or Article 13, such tax may be imposed on such gains at the time when realized and

recognized under the laws of that other State, if it is within ten years of the date on which

the property ceases to be part of the business property of the permanent establishment (or

such shorter period provided by the laws of either Contracting State).

WITH REFERENCE TO ARTICLE 9 (ASSOCIATED ENTERPRISES)

Either State may apply the rules of its national law that permit the distribution,

apportionment, or allocation of income, deductions, credits, or allowances between

related persons with a view to apportioning or allocating such deductions, credits, or

allowances in accordance with the general principles of paragraph 1 of Article 9. Article

9 shall not be construed to limit either Contracting State in allocating income between

persons that are related other than by direct or indirect participation within the meaning

of paragraph 1, such as by commercial or contractual relationships resulting in

controlling influence, so long as such allocation is otherwise in accordance with the

general principles of paragraph 1 of Article 9.

WITH REFERENCE TO PARAGRAPH 3 OF ARTICLE 10 (DIVIDENDS)

a) If the Federal Republic of Germany introduces a taxation regime that exempts from

taxation Real Estate Investment Companies, subparagraph b) of paragraph 3 of Article 10

shall not apply.

b) It is understood that in the case of the Federal Republic of Germany, subparagraph b of

paragraph 3 of Article 10 applies to the person treated as the owner of the assets of the

pension fund under section 39 of the Fiscal Code, provided the dividends may only be used

for providing retirement benefits through such fund.

WITH REFERENCE TO PARAGRAPH 9 OF ARTICLE 10 (DIVIDENDS)

The general principle of the "dividend equivalent amount", as used in the United States

law, is to approximate that portion of the income mentioned in paragraph 9 that is

comparable to the amount that would be distributed as a dividend if such income were

earned by a locally incorporated subsidiary.

WITH REFERENCE TO ARTICLE 11 (INTEREST)

The excess of the amount of interest deductible by a United States permanent

establishment of a German company over the interest actually paid by such permanent

establishment shall be treated as interest derived and beneficially owned by a resident of

the Federal Republic of Germany.

WITH REFERENCE TO ARTICLE 12 (ROYALTIES)

Where an artiste resident in one Contracting State records a performance in the other

Contracting State, has a copyrightable interest in the recording, and receives

consideration for the right to use the recording based on the sale or public playing of such

recording, then such consideration shall be governed by this Article.

WITH REFERENCE TO PARAGRAPH 2 OF ARTICLE 13 (GAINS)

The term "immovable property situated in the other Contracting State", as described in

this paragraph, when the United States is that other Contracting State includes a United

States real property interest.

WITH REFERENCE TO PARAGRAPH 3 OF ARTICLE 13 (GAINS)

Nothing in this Article shall prevent gains from the alienation by a resident of a

Contracting State of an interest in a partnership, trust, or estate that has a permanent

establishment situated in the other Contracting State from being treated as gain under

paragraph 3.

WITH REFERENCE TO PARAGRAPH 1 OF ARTICLE 17 (ARTISTES AND ATHLETES)

If an artiste or athlete is not subject to tax in the Federal Republic of Germany under the

provisions of paragraph 1 of Article 17, tax may be withheld at source in the Federal

Republic of Germany, and shall be refunded to the taxpayer only upon application at the

end of the calendar year concerned. Paragraph 6 of Article 29 (Refund of Withholding

Tax) shall remain unaffected.

WITH REFERENCE TO PARAGRAPH 3 OF ARTICLE 18 (PENSIONS, ANNUITIES, ALIMONY, CHILD SUPPORT, AND SOCIAL SECURITY)

In determining the taxable income of an individual who is a resident of the Federal

Republic of Germany there shall be allowed as a deduction in respect of alimony or

similar allowances paid to an individual who is a resident of the United States the amount

that would be allowed as a deduction if that last-mentioned individual were subject to

unlimited tax liability in the Federal Republic of Germany.

WITH REFERENCE TO PARAGRAPH 4 OF ARTICLE 18A (PENSION PLANS)

a) For purposes of paragraph 4 of Article 18A, the term "pension plan" shall include the

following and any identical or substantially similar plans established pursuant to

legislation enacted after the date of signature of this Protocol:

aa) In the case of the United States, qualified plans under section 401(a) of the Internal

Revenue Code, individual retirement plans (including individual retirement plans that are

part of a simplified employee pension plan that satisfies section 408(k), individual

retirement accounts, individual retirement annuities, and section 408(p) accounts, and

Roth IRAs under Section 408A), section 403(a) qualified annuity plans, section 403(b)

plans, and section 457(b) governmental plans.

bb) In the case of the Federal Republic of Germany, arrangements under section 1 of the

German law on employment-related pensions ( Betriebsrentengesetz ).

b) For purposes of subparagraph b) of paragraph 3 and subparagraph d) of paragraph 5 of