ARTICLE 10 — U.S. Income Tax Treaty

Dividends

Dividends paid by a company that 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 also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State the tax so charged shall not exceed:

a) 5 percent of the gross amount of the dividends if the beneficial owner is a company that holds directly at least 10 percent of the voting shares of the company paying the dividends, and

b) 15 percent of the gross amount of the dividends in all other cases.

Subparagraph b) and not subparagraph a) shall apply in the case of dividends paid by a United States person that is a Regulated Investment Company or of distributions on certificates of a German investment trust (Kapitalanlagegesellschaft). Subparagraph a) shall not apply to dividends paid by a United States person that is a Real Estate Investment Trust, and subparagraph b) shall apply only if the dividend is beneficially owned by an individual holding a less than 10 percent interest in the Real Estate Investment Trust. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

As long as a natural person resident in the Federal Republic of Germany is entitled under German law to a tax credit (Anrechnung der Körperschaftsteuer) in respect of dividends paid by a company that is a resident of the Federal Republic of Germany, the following rules shall apply to dividends paid by such company:

a) the beneficial owner of dividends subject to paragraph 2 b) shall be entitled to a further relief of tax of 5 percent of the gross amount of the dividends; and

b) for United States income tax purposes (including for the purposes of credit for foreign taxes paid) the benefit resulting from the application of subparagraph a) shall be treated as a dividend paid to a beneficial owner resident in the United States.

The provisions of this paragraph shall not apply to distributions on certificates of an investment trust.

The term "dividends” as used in this Article means income from shares, "jouissance” shares or “jouissance” rights, mining shares, founders’ shares, or other rights (not being debt claims) participating in profits, as well as other income derived from other rights that is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the distribution is a resident. The term “dividends" also includes in the Federal Republic of Germany income under a sleeping partnership (Stille Gesellschaft), "partiarisches Darlehen", or “Gewinnobligation” as well as distributions on certificates of an investment trust.
Notwithstanding the first sentence of paragraph 2 of this Article and paragraph 1 of Article 11 (Interest), income from arrangement, including debt obligations, carrying the right to participate in profits (including in the Federal Republic of Germany income under a sleeping partnership (Stille Gesellschaft), "partiarisches Darlehen", "Gewinnobligation” or "jouissance" shares or "jouissance" rights) that is deductible in determining the profits of the payor may be taxed in the Contracting State in which it arises according to the laws of that State.
The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid forms part of the business property of such permanent establishment or fixed base. In such a case the provisions of Article 7 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall apply.
Where a company that is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid forms part of the business property of a permanent establishment or a fixed base situated in that other State, even if the dividends paid consist wholly or partly of profits or income arising in such other State.
A company that is a resident of a Contracting State and that has a permanent establishment in the other Contracting State, or that is subject to tax on a net basis in that other Contracting State on items of income that may be taxed in that other State under Article 6 ( Income from Immovable (Real) Property) or under paragraph 1 of Article 13 (Gains), may be subject in that other Contracting State to a tax in addition to the tax allowable under the other provisions of this Convention. Such tax, however, may

a) in the case of the United States be imposed only on

aa) the portion of the business profits of the company attributable to the permanent establishment, and

bb) the portion of the income referred to in the preceding sentence that is subject to tax under Article 6 or paragraph 1 of Article 13, that represents the “dividend equivalent amount” of those profits and income; the term “dividend equivalent amount” shall, for the purposes of this subparagraph, have the meaning that it has under the law of the United States as it may be amended from time to time without changing the general principle thereof; and

b) in the case of the Federal Republic of Germany be imposed only on that portion of the income described in subparagraph a) that is comparable to the amount that would be distributed as a dividend by a locally incorporated subsidiary.

The tax referred to in paragraph 8 a) shall not be imposed at a rate exceeding the rate specified in paragraph 2 a).
The tax described in paragraph 8 b) may be imposed only if, under German law, a company that is not a resident of the Federal Republic of Germany is subject to corporation tax on items of income mentioned in paragraph 8 a) at a rate that does not exceed the rate of corporation tax applicable to the distributed profits of a German company by 5 percentage points or more. The maximum rate at which the tax described in paragraph 8 b) may be applied may not, when added to the excess of the corporation tax rate on a permanent establishment over the rate of corporation tax on the distributed profits of a German company, exceed 5 percent.