Singapore and Germany Sign Protocol Amending the Agreement for Avoidance of Double Taxation

10 Dec 2019

 

  1. Singapore and Germany on 9 December 2019 signed a Protocol amending the 28 June 2004 Agreement between the Republic of Singapore and the Federal Republic of Germany for the Avoidance of Double Taxation with respect to Taxes on Income and on Capital (“Protocol”).

     
  2. The signing took place in Germany between Director-General (Europe Directorate) of the Ministry of Foreign Affairs, Lee Chong Hock, and Director General for Asia and the Pacific of the German Federal Foreign Office, Ambassador Petra Sigmund.

     
  3. The Protocol will enhance the cross-border trade and investment between both countries, by lowering the withholding tax rates on income flows arising from cross-border business activities. Key terms of the Protocol can be found in the Annex.

     
  4. The Protocol also incorporates internationally agreed minimum standards to counter treaty abuse and amends the Exchange of Information Article to be in line with the internationally agreed standard on exchange of information on request. It updates the Mutual Agreement Procedure (MAP) Article to provide a mechanism that allows taxpayers to request for the arbitration of eligible MAP cases that have remained unresolved between the competent authorities of Singapore and Germany for three years.

     
  5. The full text of the Protocol is available on the Inland Revenue Authority of Singapore’s website here. The Protocol will enter into force after ratification by both countries.

   

MINISTRY OF FINANCE


Annex: Summary of key changes made by the Protocol to the Singapore-Germany DTA

 

Article in the June 2004 DTA

  Key changes brought about by the Protocol  June 2004 DTA Amendment by the Protocol 
Article 5, Permanent Establishment
 Longer period test for construction-related activities, which raises the threshold for residents of a contracting state to trigger a taxable presence in the other contracting state  6 months  12 months
  

Article 10, Dividends

  Lower dividend withholding tax rate 
  • 5% (if shareholding ≥ 10%);

  • 15% (all other cases)
 
  • 5%; (if shareholding ≥ 10%);

  • 10% (all other cases)
Article 11, Interest  Lower interest withholding tax rate  8% 0% 
Article 12, Royalties      Lower royalties withholding tax rate   8%
 5% 
  Scope of royalties articleIncludes the use of, or the right to use, industrial, commercial or scientific equipment
 Excludes the use of, or the right to use, industrial, commercial or scientific equipment