Australia and Germany today signed a new 21st century tax treaty, which will reduce tax impediments to increased bilateral trade and investment and improve the integrity of the tax system.
This more modern tax treaty will create new opportunities for Australian business and help ensure that multinational corporations pay their fair share of tax.
It replaces a previous Double Taxation Agreement between Australia and Germany signed in 1972.
Key features of the new treaty include
- Reduced withholding tax rates, helping to create a more favourable bilateral investment environment and making it cheaper for Australian business to access foreign capital and technology
- New arbitration rules, as well as a range of rules to prevent potential double taxation, which will improve tax certainty for business.
Importantly, the new treaty gives effect to the OECD/G20 base erosion and profit shifting (BEPS) recommendations, demonstrating the Australian Government’s continued commitment to tackling international tax avoidance practices.
Modernised tax treaty arrangements will further foster the already strong business relations between Australia and Germany.
Senator Cormann signed the new treaty with German Finance Minister Dr Wolfgang Schäuble – who personally championed countries taking concrete actions to address BEPS practices to ensure that everyone pays their fair share of tax - and Minister Böhmer, co-chair of the Australia-Germany Advisory Group – who has worked to ensure that a new treaty was delivered this year.
The new treaty will enter into force after both countries have completed their domestic requirements and instruments of ratification have been exchanged.
Legislation will be introduced into the Australian Parliament as soon as practicable to give the revised treaty the force of law in Australia.
A copy of the text of the new treaty is available here.
For the Treasurer – Julian Leembruggen – 0400 813 253
For Minister Cormann – Angus Capel – 0455 069 184