ARTICLE 23

Relief From Double Taxation

1. Tax shall be determined in the case of a resident of the United States or a citizen thereof as follows: 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 to the Federal Republic of Germany by or on behalf of such citizen or resident; and

b) in the case of a United States company owning at least 10 percent of the voting shares 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 to the Federal Republic of Germany by or on behalf of the distributing company with respect to the profits out of which the dividends are paid. For the purposes of this paragraph, the taxes referred to in paragraphs 1 b) and 2 of Article 2 (Taxes Covered), other than the capital tax (Vermögensteuer) and that portion of the trade tax (Gewerbesteuer) computed on a basis other than profits, shall be considered income taxes paid to the Federal Republic of Germany. Credits allowed solely by reason of this Article, when added to otherwise allowable credits for taxes referred to in paragraphs 1 b) and 2 of Article 2, shall not in any taxable year exceed that proportion of the United States tax on income that taxable income arising in the Federal Republic of Germany bears to total taxable income.

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

a) Except as provided in subparagraph b), there shall be excluded from the basis upon which German tax is imposed any item of income from sources within the United States and any item of capital situated within the United States that, according to this Convention, may be taxed in the United States. 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 income from distributions of profits on corporate rights subject to 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 preceding sentence shall not apply to dividends paid by a Regulated Investment Company and distributions of amounts that have been

deducted when calculating for United States tax purposes the profits of 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 or 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 paragraph 2 b) of Article 13;

cc) income to which Article 16 (Directors' Fees) applies; dd) income to which Article 17 (Artistes and Athletes) applies; ee) income within the meaning of paragraph 1 a) of Article 19 (Government Service; Social Security) paid to a German national;

ff) income which would, but for Article 28 (Limitation on Benefits), remain exempt from United States tax under this Convention; and

gg) income to which Paragraph 21 of the Protocol applies.

For the purposes of this paragraph, profits, income, or gains of a resident of the Federal Republic of Germany shall be deemed to arise from sources in the United States if they are taxed in the United States in accordance with this Convention.

3. 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 2 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 1 of the Protocol;

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).

4. Where a company that is a resident of the Federal Republic of Germany distributes income derived from sources within the United States, this Article shall not preclude the compensatory imposition of corporation tax on such distributions in accordance with the provisions of the tax law of the Federal Republic of Germany.