ARTICLE 29

Refund of Withholding Tax

This Article establishes rules for the implementation by a Contracting State of reduced withholding at source, as provided in the Convention, on items of income, such as dividends, interest and royalties, derived by a resident of the other Contracting State. Paragraphs 1 through 4 of the Article provide for the imposition of tax at statutory rates and the payment of refunds, upon application, to the extent necessary to reduce the tax payment to the level prescribed in the Convention. Application for refund of tax with respect to an item of income must be made within four years from the end of the calendar year in which the item of income is received. The Contracting State in which the income arises may require certification by the State of residence of the income recipient that the recipient has fulfilled any applicable conditions for unlimited tax liability in that State.

The procedures described above will be implemented by competent authority agreement pursuant to Article 25 (Mutual Agreement Procedure). The competent authorities may also establish by mutual agreement other procedures for the implementation of tax benefits provided for in the Convention.

This Article was included at the request of Germany. The U.S. Model does not spell out procedures for the implementation of reduced withholding at source. Such procedures, however, including the types of requirements and conditions provided for in Article 29 are considered by the United States to be implicitly authorized by treaties. The United States does not presently intend, on the basis of this Article, to modify its current procedures with respect to U.S. withholding of tax on income payments to residents of Germany. Any changes which may be made in U.S. procedures will be generally applicable under U.S. treaties.