After concluding their double taxation agreement many years back, Germany and Australia have decided to renew and update their convention according to the most recent international standards. One of the main purposes of the new agreement will be to provide enhanced economic cooperation between the two countries. For information related to the actual double tax treaty with Australia you can refer to our specialists in company registration in Germany.
The first intention for renewing the 1972 German-Australian double taxation treaty was made earlier this summer. The announcement was confirmed this autumn when the two countries have also started negotiations for a new agreement. The premises for concluding a new double tax treaty with Australia came after realizing the old agreement was reflecting the economic situations in Germany and Australia at that time.
The two countries’ officials have discussed the creation of new investment opportunities in both Germany and Australia, their success depending on the contents of the new agreement. Both Germany and Australia want to update the new treaty in accordance with the current Organization for Economic Co-operation and Development objectives in order to address base erosion and profit shifting issues. The new double taxation agreement with Australia will also ensure Australian and German companies will benefit from reduced tax rates in order to maximize the trade relations between the two countries.
Even if negotiations are being carried, not all the provisions in the actual double taxation with Australia will be modified. Under the actual agreement, Australian and German companies benefit from reduced tax rates with respect to dividend, interest and royalties payments. If the dividend tax will not exceed 15% of the gross amount, interests and royalties will taxed at maximum 15% of the gross amount. German citizens working in an Australian company will be taxed on that particular income only in the state it was derived. The same protocol applies in case of Australian citizens working in German companies. These provisions could remain place in the new treaty also, as no reference to new tax rates has been made.
For an update on the negotiations you can contact our German representatives in company formation.