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AGREEMENTBETWEEN JAPAN AND THE FEDERAL REPUBLIC OF GERMANYFOR THE ELIMINATION OF DOUBLE TAXATIONWITH RESPECT TO TAXES ON INCOME AND TO CERTAIN OTHER TAXESAND THE PREVENTION OF TAX EVASION AND AVOIDANCEAGREEMENTBETWEEN JAPAN AND THE FEDERAL REPUBLIC OF GERMANYFOR THE ELIMINATION OF DOUBLE TAXATIONWITH RESPECT TO TAXES ON INCOME AND TO CERTAIN OTHER TAXESAND THE PREVENTION OF TAX EVASION AND AVOIDANCEJapan and the Federal Republic of Germany,
Desiring to further develop their economic
relationship and to enhance their cooperation in tax
matters,
Intending to conclude a new Agreement for theelimination of double taxation with respect to taxes on
income and to certain other taxes without creating
opportunities for non-taxation or reduced taxation throughtax evasion or avoidance (including through treaty-shopping
arrangements aimed at obtaining reliefs provided in thisAgreement for the indirect benefit of residents of third
States),Have agreed as follows:
Article 1
Persons Covered
1.
This Agreement shall apply to persons who areresidents of one or both of the Contracting States.
2.
For the purposes of this Agreement, income derived byor through an entity or arrangement that is treated aswholly or partly fiscally transparent under the tax law ofeither Contracting State shall be considered to be incomeof a resident of a Contracting State but only to the extent
that the income is treated, for purposes of taxation bythat Contracting State, as the income of a resident of thatContracting State. In no case shall the provisions of thisparagraph be construed so as to restrict in any way aContracting State’s right to tax the residents of thatContracting State. For the purposes of this paragraph, theterm “fiscally transparent” means situations where, under
the tax law of a Contracting State, income, or part
thereof, of an entity or arrangement is not taxed at thelevel of the entity or arrangement but at the level of thepersons who have an interest in that entity or arrangement.

- 1 -Article 2
Taxes Covered
1.

This Agreement shall apply to the following taxes:(a)in the case of Japan:(i)

the income tax;(ii)

the corporation tax;(iii)

the special income tax for reconstruction;(iv)

the local corporation tax;(v)

the local inhabitant taxes; and(vi)

the enterprise tax(hereinafter referred to as “Japanese tax”);
and(b)

in the case of the Federal Republic of Germany:(i)

the income tax (Einkommensteuer);(ii)

the corporate income tax(Körperschaftsteuer);(iii)

the trade tax (Gewerbesteuer); and(iv)

the solidarity surcharge(Solidaritätszuschlag)(hereinafter referred to as “German tax”).
2.
This Agreement shall apply also to any identical or
substantially similar taxes that are imposed after the dateof signature of the Agreement in addition to, or in placeof, those referred to in paragraph 1. The competentauthorities of the Contracting States shall notify eachother of any significant changes that have been made in
their respective taxation laws, within a reasonable periodof time after such changes.
Article 3
General Definitions
1.
For the purposes of this Agreement, unless the context
otherwise requires:

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(a)

the term “Japan”, when used in a geographicalsense, means all the territory of Japan,
including its territorial sea, in which the laws
relating to Japanese tax are in force, and all
the area beyond its territorial sea, including
the seabed and subsoil thereof, over which Japan
has sovereign rights in accordance withinternational law and in which the laws relating
to Japanese tax are in force;(b)

the term “Federal Republic of Germany”, when used
in a geographical sense, means the territory of
the Federal Republic of Germany as well as thearea of the seabed, its subsoil and thesuperjacent water column adjacent to theterritorial sea, insofar as the Federal Republicof Germany exercises sovereign rights andjurisdiction in conformity with international law
and its national legislation for the purpose of
exploring, exploiting, conserving and managing
the living and non-living natural resources orfor the production of energy from renewablesources;(c)the terms “a Contracting State” and “the other
Contracting State” mean Japan or the Federal
Republic of Germany, as the context requires;(d)the term “person” includes an individual, acompany and any other body of persons;(e)the term “company” means any body corporate or
any entity that is treated as a body corporate
for tax purposes;(f)the term “enterprise” applies to the carrying onof any business;(g)

the term “business” includes the performance ofprofessional services and of other activities ofan independent character;(h)the terms “enterprise of a Contracting State” and“enterprise of the other Contracting State” mean
respectively an enterprise carried on by aresident of a Contracting State and an enterprise
carried on by a resident of the other Contracting
State;

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(i)

the term “international traffic” means any
transport by a ship or aircraft operated by anenterprise of a Contracting State, except when
the ship or aircraft is operated solely between
places in the other Contracting State;(j)the term “national” means:

(k)

(i)

in the case of Japan, any individual
possessing the nationality of Japan and any
legal person, partnership or association
deriving its status as such from the laws inforce in Japan; and(ii)

in the case of the Federal Republic of
Germany, any German within the meaning of
the Basic Law (Grundgesetz) for the Federal
Republic of Germany and any legal person,
partnership or association deriving its
status as such from the laws in force in theFederal Republic of Germany;

the term “competent authority” means:(i)in the case of Japan, the Minister ofFinance or his authorised representative;
and

(ii)

in the case of the Federal Republic of
Germany, the Federal Ministry of Finance or
the agency to which it has delegated its
powers.

2.
As regards the application of this Agreement at any
time by a Contracting State, any term not defined thereinshall, unless the context otherwise requires, have themeaning that it has at that time under the laws of thatContracting State for the purposes of the taxes to which
the Agreement applies, any meaning under the applicable tax
laws of that Contracting State prevailing over a meaning
given to the term under other laws of that Contracting
State.

- 4 -Article 4
Resident
1.
For the purposes of this Agreement, the term “residentof a Contracting State” means any person who, under thelaws of that Contracting State, is liable to tax therein byreason of his domicile, residence, place of management,
place of head or main office or any other criterion of asimilar nature, and also includes that Contracting State,
any federal state (Land) thereof and any politicalsubdivision or local authority thereof. This term,
however, does not include any person who is liable to tax
in that Contracting State in respect only of income fromsources in that Contracting State.
2.
Where by reason of the provisions of paragraph 1 an
individual is a resident of both Contracting States, thenhis status shall be determined as follows:(a)he shall be deemed to be a resident only of theContracting State in which he has a permanent
home available to him; if he has a permanent homeavailable to him in both Contracting States, heshall be deemed to be a resident only of theContracting State with which his personal andeconomic relations are closer (centre of vitalinterests);(b)

if the Contracting State in which he has his
centre of vital interests cannot be determined,
or if he has not a permanent home available tohim in either Contracting State, he shall bedeemed to be a resident only of the Contracting
State in which he has an habitual abode;(c)

if he has an habitual abode in both Contracting
States or in neither of them, he shall be deemed
to be a resident only of the Contracting State ofwhich he is a national;(d)

if he is a national of both Contracting States orof neither of them, the competent authorities of
the Contracting States shall settle the question
by mutual agreement.

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3.
Where by reason of the provisions of paragraph 1 aperson other than an individual is a resident of bothContracting States, the competent authorities of theContracting States shall endeavour to determine by mutual
agreement the Contracting State of which such person shallbe deemed to be a resident for the purposes of thisAgreement, having regard to its place of effective
management, its place of head or main office, the place
where it is incorporated or otherwise constituted and anyother relevant factors. In the absence of such agreement,such person shall not be entitled to any relief or
exemption from tax provided by the Agreement.
Article 5
Permanent Establishment
1.
For the purposes of this Agreement, the term
“permanent establishment” means a fixed place of businessthrough which the business of an enterprise is wholly or
partly carried on.
2.
The term “permanent establishment” includes
especially:(a)a place of management;(b)a branch;(c)an office;(d)a factory;(e)a workshop; and(f)a mine, an oil or gas well, a quarry or any otherplace of extraction of natural resources.

3.
A building site or construction or installation
project constitutes a permanent establishment only if it
lasts more than twelve months.
4.
Notwithstanding the preceding provisions of this
Article, the term “permanent establishment” shall be deemed
not to include:(a)the use of facilities solely for the purpose ofstorage, display or delivery of goods ormerchandise belonging to the enterprise;

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(b)

the maintenance of a stock of goods ormerchandise belonging to the enterprise solely
for the purpose of storage, display or delivery;(c)the maintenance of a stock of goods ormerchandise belonging to the enterprise solely
for the purpose of processing by anotherenterprise;(d)the maintenance of a fixed place of businesssolely for the purpose of purchasing goods ormerchandise or of collecting information, for theenterprise;(e)the maintenance of a fixed place of businesssolely for the purpose of carrying on, for theenterprise, any other activity of a preparatory
or auxiliary character;(f)the maintenance of a fixed place of businesssolely for any combination of activities
mentioned in subparagraphs (a) to (e), provided
that the overall activity of the fixed place ofbusiness resulting from this combination is of apreparatory or auxiliary character.

5.
Notwithstanding the provisions of paragraphs 1 and 2,
where a person - other than an agent of an independent
status to whom the provisions of paragraph 6 apply - isacting on behalf of an enterprise and has, and habitually
exercises, in a Contracting State an authority to conclude
contracts in the name of the enterprise, that enterpriseshall be deemed to have a permanent establishment in thatContracting State in respect of any activities which that
person undertakes for the enterprise, unless the activities
of such person are limited to those mentioned in paragraph
4 which, if exercised through a fixed place of business,would not make this fixed place of business a permanentestablishment under the provisions of that paragraph.
6.
An enterprise shall not be deemed to have a permanentestablishment in a Contracting State merely because it
carries on business in that Contracting State through a
broker, general commission agent or any other agent of an
independent status, provided that such persons are acting
in the ordinary course of their business.

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7.
The fact that a company which is a resident of aContracting State controls or is controlled by a company
which is a resident of the other Contracting State, or
which carries on business in that other Contracting State(whether through a permanent establishment or otherwise),shall not of itself constitute either company a permanentestablishment of the other.
Article 6
Income from Immovable Property
1.
Income derived by a resident of a Contracting State
from immovable property (including income from agriculture
or forestry) situated in the other Contracting State may betaxed in that other Contracting State.
2.
The term “immovable property” shall have the meaning
which it has under the laws of the Contracting State inwhich the property in question is situated. The term shallin any case include property accessory to immovable
property, livestock and equipment used in agriculture andforestry, rights to which the provisions of general law
respecting landed property apply, usufruct of immovable
property and rights to variable or fixed payments as
consideration for the working of, or the right to work,
mineral deposits, sources and other natural resources;
ships and aircraft shall not be regarded as immovable
property.
3.
The provisions of paragraph 1 shall apply to income
derived from the direct use, letting, or use in any otherform of immovable property.
4.
The provisions of paragraphs 1 and 3 shall also apply
to the income from immovable property of an enterprise.
Article 7
Business Profits
1.
Profits of an enterprise of a Contracting State shallbe taxable only in that Contracting State unless theenterprise carries on business in the other Contracting
State through a permanent establishment situated therein.
If the enterprise carries on business as aforesaid, theprofits that are attributable to the permanentestablishment in accordance with the provisions ofparagraph 2 may be taxed in that other Contracting State.

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2.
For the purposes of this Article and Article 22, theprofits that are attributable in each Contracting State to
the permanent establishment referred to in paragraph 1 are
the profits it might be expected to make, in particular inits dealings with other parts of the enterprise, if it werea separate and independent enterprise engaged in the sameor similar activities under the same or similar conditions,taking into account the functions performed, assets used
and risks assumed by the enterprise through the permanentestablishment and through the other parts of theenterprise.
3.
Where, in accordance with paragraph 2, a Contracting
State adjusts the profits that are attributable to apermanent establishment of an enterprise of one of theContracting States and taxes accordingly profits of theenterprise that have been charged to tax in the other
Contracting State, that other Contracting State shall, tothe extent necessary to eliminate double taxation on these
profits, make an appropriate adjustment if the competentauthority of that other Contracting State agrees with theadjustment made by the first-mentioned Contracting State;
if the competent authority of that other Contracting State
does not so agree, the competent authorities of theContracting States shall endeavour to eliminate any double
taxation resulting therefrom by mutual agreement.
4.
Where profits include items of income which are dealt
with separately in other Articles of this Agreement, thenthe provisions of those Articles shall not be affected by
the provisions of this Article.
Article 8
Shipping and Air Transport
1.
Profits from the operation of ships or aircraft ininternational traffic carried on by an enterprise of aContracting State shall be taxable only in that Contracting
State.
2.
For the purposes of this Article, profits from theoperation of ships or aircraft in international traffic
include:(a)profits from the rental on a bareboat basis ofships or aircraft; and(b)profits from the use, maintenance or rental ofcontainers (including trailers and related
equipment for the transport of containers) used
for the transport of goods or merchandise;- 9 -where such rental or such use, maintenance or rental, as
the case may be, is incidental to the operation of ships oraircraft in international traffic.
3.
The provisions of the preceding paragraphs of this
Article shall also apply to profits from the participation
in a pool, a joint business or an international operating
agency.
Article 9
Associated Enterprises
1.

Where
(a)

an enterprise of a Contracting State participates
directly or indirectly in the management, control
or capital of an enterprise of the other
Contracting State, or(b)

the same persons participate directly or
indirectly in the management, control or capitalof an enterprise of a Contracting State and an
enterprise of the other Contracting State,

and in either case conditions are made or imposed between
the two enterprises in their commercial or financial
relations which differ from those which would be madebetween independent enterprises, then any profits which
would, but for those conditions, have accrued to one of theenterprises, but, by reason of those conditions, have notso accrued, may be included in the profits of thatenterprise and taxed accordingly.
2.
Where a Contracting State includes in the profits ofan enterprise of that Contracting State - and taxes
accordingly - profits on which an enterprise of the other
Contracting State has been charged to tax in that other
Contracting State and the profits so included are profits
which would have accrued to the enterprise of the firstmentioned Contracting State if the conditions made between
the two enterprises had been those which would have been
made between independent enterprises, then that other
Contracting State shall make an appropriate adjustment tothe amount of the tax charged therein on those profits. In
determining such adjustment, due regard shall be had to theother provisions of this Agreement and the competentauthorities of the Contracting States shall, if necessary,consult each other.

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3.
Notwithstanding the provisions of paragraph 1, aContracting State shall not change the profits of anenterprise of that Contracting State in the circumstancesreferred to in that paragraph after ten years from the endof the taxable year in which the profits that would be
subject to such change would, but for the conditions
referred to in that paragraph, have accrued to thatenterprise. The provisions of this paragraph shall not
apply in the case of fraud or wilful default or when thecompetent authority of a Contracting State notifies withinthat ten-year period the competent authority of the other
Contracting State of the enterprise of that other
Contracting State whose tax liability to that other
Contracting State may be directly affected by the taxation
provided for in paragraph 1 on an enterprise of the firstmentioned Contracting State by that Contracting State.
Article 10
Dividends
1.
Dividends paid by a company which is a resident of aContracting State to a resident of the other Contracting
State may be taxed in that other Contracting State.
2.
However, dividends paid by a company which is a
resident of a Contracting State may also be taxed in thatContracting State according to the laws of that Contracting
State, but if the beneficial owner of the dividends is a
resident of the other Contracting State, the tax so charged
shall not exceed:(a)5 per cent of the gross amount of the dividends
if the beneficial owner is a company (other thana partnership) that has owned directly, for theperiod of six months ending on the date on which
entitlement to the dividends is determined, atleast 10 per cent of the voting shares of thecompany paying the dividends;(b)

15 per cent of the gross amount of the dividends
in all other cases.

3.
Notwithstanding the provisions of paragraph 2,
dividends shall not be taxed in the Contracting State ofwhich the company paying the dividends is a resident if thebeneficial owner of the dividends is a resident of theother Contracting State and is a company (other than apartnership) that has owned directly, for the period ofeighteen months ending on the date on which entitlement to
the dividends is determined, at least 25 per cent of thevoting shares of the company paying the dividends.

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4.
The provisions of paragraphs 2 and 3 shall not affectthe taxation of the company in respect of the profits outof which the dividends are paid.
5.
The term “dividends” as used in this Article means
income from shares, “jouissance” shares or “jouissance”
rights, mining shares, founders’ shares or other rights,
not being debt-claims, participating in profits, as well asother income which is subjected to the same taxation
treatment as income from shares by the tax laws of theContracting State of which the company making the
distribution is a resident.
6.
The provisions of paragraphs 1, 2 and 3 shall not
apply if the beneficial owner of the dividends, being a
resident of a Contracting State, carries on business in theother Contracting State of which the company paying thedividends is a resident through a permanent establishment
situated therein and the holding in respect of which thedividends are paid is effectively connected with suchpermanent establishment. In such case the provisions ofArticle 7 shall apply.
7.
Where a company which is a resident of a Contracting
State derives profits or income from the other Contracting
State, that other Contracting State may not impose any tax
on the dividends paid by the company, except insofar as
such dividends are paid to a resident of that other
Contracting State or insofar as the holding in respect ofwhich the dividends are paid is effectively connected witha permanent establishment situated in that other
Contracting State, nor subject the company’s undistributed
profits to a tax on the company’s undistributed profits,even if the dividends paid or the undistributed profits
consist wholly or partly of profits or income arising insuch other Contracting State.
Article 11
Interest
1.
Interest arising in a Contracting State andbeneficially owned by a resident of the other Contracting
State shall be taxable only in that other Contracting
State.

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2.
The term “interest” as used in this Article means
income from debt-claims of every kind, whether or notsecured by mortgage and whether or not carrying a right toparticipate in the debtor’s profits, and in particular,
income from government securities and income from bonds ordebentures, including premiums and prizes attaching to suchsecurities, bonds or debentures, and all other income thatis subjected to the same taxation treatment as income frommoney lent by the tax laws of the Contracting State inwhich the income arises. This term, however, does notinclude income dealt with in Article 10. Penalty charges
for late payment shall not be regarded as interest for the
purpose of this Article.
3.
The provisions of paragraph 1 shall not apply if thebeneficial owner of the interest, being a resident of aContracting State, carries on business in the other
Contracting State in which the interest arises through apermanent establishment situated therein and the debt-claim
in respect of which the interest is paid is effectively
connected with such permanent establishment. In such casethe provisions of Article 7 shall apply.
4.
Where, by reason of a special relationship between thepayer and the beneficial owner or between both of them andsome other person, the amount of the interest, having
regard to the debt-claim for which it is paid, exceeds theamount which would have been agreed upon by the payer andthe beneficial owner in the absence of such relationship,
the provisions of this Article shall apply only to thelast-mentioned amount. In such case, the excess part ofthe payments shall remain taxable according to the laws ofeach Contracting State, due regard being had to the otherprovisions of this Agreement.
Article 12
Royalties
1.
Royalties arising in a Contracting State andbeneficially owned by a resident of the other Contracting
State shall be taxable only in that other Contracting
State.
2.
The term “royalties” as used in this Article means
payments of any kind received as a consideration for theuse of, or the right to use, any copyright of literary,artistic or scientific work including cinematograph films,
or any patent, trade mark, design or model, plan, or secretformula or process, or for information concerningindustrial, commercial or scientific experience.

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3.
The provisions of paragraph 1 shall not apply if thebeneficial owner of the royalties, being a resident of aContracting State, carries on business in the other
Contracting State in which the royalties arise through apermanent establishment situated therein and the right orproperty in respect of which the royalties are paid iseffectively connected with such permanent establishment.
In such case the provisions of Article 7 shall apply.
4.
Where, by reason of a special relationship between thepayer and the beneficial owner or between both of them andsome other person, the amount of the royalties, having
regard to the use, right or information for which they arepaid, exceeds the amount which would have been agreed uponby the payer and the beneficial owner in the absence ofsuch relationship, the provisions of this Article shallapply only to the last-mentioned amount. In such case, theexcess part of the payments shall remain taxable according
to the laws of each Contracting State, due regard being had
to the other provisions of this Agreement.
Article 13
Capital Gains
1.
Gains derived by a resident of a Contracting State
from the alienation of immovable property referred to in
Article 6 and situated in the other Contracting State may
be taxed in that other Contracting State.
2.
Gains derived by a resident of a Contracting State
from the alienation of shares or interests in a company,
partnership or trust deriving at least 50 per cent of thevalue of its property directly or indirectly from immovable
property referred to in Article 6 and situated in the other
Contracting State may be taxed in that other Contracting
State.
3.
Gains from the alienation of any property, other thanimmovable property, forming part of the business property
of a permanent establishment which an enterprise of aContracting State has in the other Contracting State,including such gains from the alienation of such apermanent establishment (alone or with the wholeenterprise), may be taxed in that other Contracting State.
4.
Gains derived by an enterprise of a Contracting State
from the alienation of ships or aircraft operated by thatenterprise in international traffic or any property, otherthan immovable property, pertaining to the operation ofsuch ships or aircraft shall be taxable only in thatContracting State.

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5.
Gains from the alienation of any property other thanthat referred to in the preceding paragraphs of this
Article shall be taxable only in the Contracting State ofwhich the alienator is a resident.
Article 14
Income from Employment
1.
Subject to the provisions of Articles 15, 17 and 18,
salaries, wages and other similar remuneration derived by aresident of a Contracting State in respect of an employment
shall be taxable only in that Contracting State unless theemployment is exercised in the other Contracting State. If
the employment is so exercised, such remuneration as isderived therefrom may be taxed in that other Contracting
State.
2.
Notwithstanding the provisions of paragraph 1,
remuneration derived by a resident of a Contracting Statein respect of an employment exercised in the other
Contracting State shall be taxable only in the firstmentioned Contracting State if:(a)the recipient is present in that other
Contracting State for a period or periods notexceeding in the aggregate 183 days in any twelve
month period commencing or ending in the taxable
year concerned, and(b)

the remuneration is paid by, or on behalf of, anemployer who is not a resident of that other
Contracting State, and(c)the remuneration is not borne by a permanentestablishment which the employer has in that
other Contracting State.

3.
Notwithstanding the preceding provisions of this
Article, remuneration derived in respect of an employment
exercised aboard a ship or aircraft operated ininternational traffic by an enterprise of a Contracting
State may be taxed in that Contracting State.
Article 15
Directors’ Fees
Directors’ fees and other similar payments derived bya resident of a Contracting State in his capacity as amember of the board of directors of a company which is a
resident of the other Contracting State may be taxed inthat other Contracting State.

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Article 16
Entertainers and Sportspersons
1.
Notwithstanding the provisions of Article 14, income
derived by a resident of a Contracting State as anentertainer, such as a theatre, motion picture, radio or
television artiste, or a musician, or as a sportsperson,from that resident’s personal activities as such exercisedin the other Contracting State, may be taxed in that other
Contracting State.
2.
Where income in respect of personal activities
exercised by an entertainer or a sportsperson acting as
such accrues not to the entertainer or sportsperson but toanother person, that income may, notwithstanding theprovisions of Article 14, be taxed in the Contracting Statein which the activities of the entertainer or sportsperson
are exercised.
Article 17
Pensions and Other Similar Payments
1.
Subject to the provisions of paragraph 2 of Article
18, pensions and other similar remuneration arising in aContracting State and paid to a resident of the other
Contracting State or payments under the social security
legislation of the first-mentioned Contracting State paid
to a resident of the other Contracting State may be taxed
in the first-mentioned Contracting State.
2.
Notwithstanding the provisions of paragraph 1,
recurrent or non-recurrent payments made by a Contracting
State, a federal state (Land) thereof or a politicalsubdivision or local authority thereof to a person who is a
resident of the other Contracting State as compensation forpolitical persecution or for an injury or damage sustained
as a result of war (including restitution payments) shallbe taxable only in the first-mentioned Contracting State.
Article 18
Government Service
1.

(a)Salaries, wages and other similar remuneration
paid by a Contracting State, a federal state(Land) thereof or a political subdivision or
local authority thereof to an individual inrespect of services rendered to that Contracting
State, federal state (Land) or politicalsubdivision or local authority shall be taxable
only in that Contracting State.

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(b)2.

However, such salaries, wages and other similar
remuneration shall be taxable only in the other
Contracting State if the services are rendered inthat other Contracting State and the individual
is a resident of that other Contracting State
who:
(i)

is a national of that other Contracting
State; or(ii)

did not become a resident of that other
Contracting State solely for the purpose of
rendering the services.

(a)

Notwithstanding the provisions of paragraph 1,
pensions and other similar remuneration paid by,or out of funds which are created by or to which
contributions are made by, a Contracting State, afederal state (Land) thereof or a politicalsubdivision or local authority thereof to anindividual in respect of services rendered tothat Contracting State, federal state (Land) or
political subdivision or local authority shall betaxable only in that Contracting State.

(b)

However, such pensions and other similar
remuneration shall be taxable only in the other
Contracting State if the individual is a residentof, and a national of, that other Contracting
State.

3.
The provisions of Articles 14, 15, 16 and 17 shallapply to salaries, wages, pensions, and other similar
remuneration in respect of services rendered in connection
with a business carried on by a Contracting State, afederal state (Land) thereof or a political subdivision or
local authority thereof.
4.
The provisions of paragraphs 1 and 2 shall apply
mutatis mutandis to salaries, wages, pensions, and othersimilar remuneration paid by the Goethe Institute (GoetheInstitut), the German Academic Exchange Service (Deutscher
Akademischer Austauschdienst) or other similar institutions
as may be agreed upon between the Governments of theContracting States through an exchange of diplomatic notes
to an individual in respect of services rendered to them.
If, however, such remuneration is not taxed in theContracting State where the institution was founded, theprovisions of Article 14, 15, 16 or 17, as the case may be,shall apply.

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Article 19Students
Payments which a student or business apprentice who isor was immediately before visiting a Contracting State aresident of the other Contracting State and who is present
in the first-mentioned Contracting State solely for the
purpose of his education or training receives for the
purpose of his maintenance, education or training shall not
be taxed in the first-mentioned Contracting State, provided
that such payments arise from sources outside the firstmentioned Contracting State. The exemption provided bythis Article shall apply to a business apprentice only fora period not exceeding one year from the date on which hefirst begins his training in the first-mentioned
Contracting State.
Article 20
Other Income
1.
Items of income beneficially owned by a resident of aContracting State, wherever arising, not dealt with in theforegoing Articles of this Agreement shall be taxable onlyin that Contracting State.
2.
The provisions of paragraph 1 shall not apply toincome, other than income from immovable property as
defined in paragraph 2 of Article 6, if the beneficial
owner of such income, being a resident of a Contracting
State, carries on business in the other Contracting Statethrough a permanent establishment situated therein and theright or property in respect of which the income is paid iseffectively connected with such permanent establishment.
In such case the provisions of Article 7 shall apply.
3.
Where, by reason of a special relationship between theresident referred to in paragraph 1 and the payer or
between both of them and some other person, the amount of
the income referred to in paragraph 1 exceeds the amountwhich would have been agreed upon between them in theabsence of such relationship, the provisions of this
Article shall apply only to the last-mentioned amount. In
such case, the excess part of the payments shall remaintaxable according to the laws of each Contracting State,
due regard being had to the other provisions of thisAgreement.

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Article 21
Entitlement to Benefits
1.
Except as otherwise provided in this Article, aresident of a Contracting State that derives income fromthe other Contracting State shall be entitled to all thebenefits under this Agreement for a taxable year only ifsuch resident is a qualified person as defined in paragraph
2 and satisfies any other specified conditions in therelevant provisions of the Agreement for the obtaining ofsuch benefits.
2.
A resident of a Contracting State is a qualified
person for a taxable year only if such resident is either:(a)an individual;(b)a qualified governmental entity;(c)a company, if its principal class of shares islisted or registered and is regularly traded on
one or more recognised stock exchanges;(d)a pension fund or pension scheme, provided that,
as of the end of the prior taxable year, morethan 50 per cent of the beneficiaries, members or
participants of that pension fund or pension
scheme are individuals who are residents ofeither Contracting State;(e)a person established under the laws of thatContracting State and operated exclusively for areligious, charitable, educational, scientific,
artistic, cultural or public purpose, only if allor part of its income may be exempt from tax
under the laws of that Contracting State; or(f)a person other than an individual, if at least 65
per cent of the voting shares or other beneficial
interests of the person are owned, directly or
indirectly, by residents of that Contracting
State that are qualified persons by reason of
subparagraph (a), (b), (c), (d) or (e).

3.
Notwithstanding that a resident of a Contracting State
may not be a qualified person, that resident shall beentitled to a benefit under this Agreement in respect of an
item of income derived from the other Contracting State ifthat resident satisfies any other specified conditions in
the relevant provisions of the Agreement for the obtainingof such benefit and if:- 19 -

(a)at least 65 per cent of the voting shares orother beneficial interests of the person are
owned, directly or indirectly, by persons who, if
they had derived the item of income directly,
would, under the Agreement, be entitled toequivalent or more favourable benefits; or(b)

at least 90 per cent of the voting shares orother beneficial interests of the person are
owned, directly or indirectly, by persons who, if
they had derived the item of income directly,
would, under the Agreement or an agreement that
the Contracting State from which the item ofincome arise has concluded with another State, be
entitled to equivalent or more favourable
benefits.

4.
Where the provisions of subparagraph (f) of paragraph
2 or paragraph 3 apply:

5.

(a)

in respect of taxation by withholding at source,a resident of a Contracting State shall beconsidered to satisfy the conditions described inthat subparagraph or that paragraph for the
taxable year in which payment of an item ofincome is made if such resident satisfies thoseconditions during the twelve month period
preceding the date of the payment (or, in thecase of dividends, the date on which entitlement
to the dividends is determined);(b)in all other cases, a resident of a Contracting
State shall be considered to satisfy theconditions described in that subparagraph or thatparagraph for a taxable year if such resident
satisfies those conditions on at least half thedays of the taxable year.

(a)Notwithstanding that a resident of a Contracting
State may not be a qualified person, that
resident shall be entitled to a benefit under
this Agreement in respect of an item of income
derived from the other Contracting State if:(i)that resident is engaged in the active
conduct of a business (other than thebusiness of making or managing investments
for that resident’s own account, unless thebusiness is banking, insurance or securities
business carried on by a bank, insurancecompany or securities dealer) in the firstmentioned Contracting State;- 20 -

(ii)the income derived from that other
Contracting State is derived in connection
with, or is incidental to, that business;
and

(iii)

that resident satisfies any other specified
conditions in the relevant provisions of theAgreement for the obtaining of such benefit.

(b)

If a resident of a Contracting State derives anitem of income from a business carried on by that
resident in the other Contracting State orderives an item of income arising in the other
Contracting State from a person that has withthat resident a relationship described insubparagraph (a) or (b) of paragraph 1 of Article
9, the conditions described in subparagraph (a)of this paragraph shall be considered to besatisfied with respect to such item of income
only if the business carried on in the firstmentioned Contracting State is substantial in
relation to the business carried on in that other
Contracting State. Whether such business issubstantial for the purpose of this paragraphshall be determined on the basis of all the facts
and circumstances.

(c)

In determining whether a person is engaged in theactive conduct of a business in a Contracting
State under subparagraph (a), the businessconducted by a partnership in which that person
is a partner, and the business conducted by aperson connected to such person only to theextent that both persons are engaged in the sameor complementary lines of business, shall bedeemed to be conducted by such person. A person
shall be connected to another if one owns,
directly or indirectly, at least 50 per cent of
the beneficial interests in the other (or, in thecase of a company, at least 50 per cent of thevoting shares of the company) or another person
owns, directly or indirectly, at least 50 per
cent of the beneficial interests (or, in the caseof a company, at least 50 per cent of the voting
shares of the company) in each person. In any
case, a person shall be considered to beconnected to another if, on the basis of all thefacts and circumstances, one has control of theother or both are under the control of the same
person or persons.

- 21 -

6.
A resident of a Contracting State that is neither aqualified person nor entitled under paragraph 3 or 5 to thebenefits referred to in those paragraphs shall,nevertheless, be granted all the benefits under thisAgreement or a benefit under the Agreement in respect of an
item of income derived from the other Contracting State if,
upon request from that resident, the competent authority ofthat other Contracting State determines, in accordance withits domestic law or administrative practice, that theestablishment, acquisition or maintenance of such resident
and the conduct of its operations are considered as nothaving the obtaining of such benefits as one of theprincipal purposes. The competent authority of theContracting State to which a request has been made under
this paragraph by a resident of the other Contracting State
will consult with the competent authority of that other
Contracting State before rejecting the request.
7.

For the purposes of this Article:(a)the term “qualified governmental entity” means
the Government of a Contracting State, of afederal state (Land) thereof, or of any politicalsubdivision or local authority thereof, the Bankof Japan, the Federal Bank of Germany (Deutsche
Bundesbank) or a person that is wholly owned,
directly or indirectly, by the Government of aContracting State, of a federal state (Land)
thereof, or of a political subdivision or local
authority thereof;(b)

the term “principal class of shares” means theclass or classes of shares of a company which
represent a majority of the voting shares of thecompany;(c)the term “recognised stock exchange” means:(i)any stock exchange established under theterms of the Financial Instruments andExchange Law (Law No. 25 of 1948) of Japan;(ii)

any regulated market pursuant to the Markets
in Financial Instruments Directive
2004/39/EC (as amended) or any successor
Directive;(iii)

Hong Kong Exchanges and Clearing, the NASDAQ
System, the New York Stock Exchange,
Singapore Exchange, SIX Swiss Exchange andthe Taiwan Stock Exchange; and- 22 -

(iv)(d)

any other stock exchange which the competentauthorities of the Contracting States agree
to recognise for the purposes of this
Article;the term “pension fund or pension scheme” means
any person that:(i)was constituted and is operated exclusively
or almost exclusively to administer orprovide pensions or other similar benefits;
or

(ii)

was constituted and is operated to invest
funds for the benefit of persons referred toin clause (i), provided that substantially
all the income of that person is derived
from investments made for the benefit ofthese persons.

8.
Notwithstanding the other provisions of thisAgreement, a benefit under the Agreement shall not be
granted in respect of an item of income if it is reasonable
to conclude, having regard to all relevant facts andcircumstances, that obtaining that benefit was one of theprincipal purposes of any arrangement or transaction that
resulted directly or indirectly in that benefit, unless it
is established that granting that benefit in thesecircumstances would be in accordance with the object andpurpose of the relevant provisions of the Agreement.
9.
Nothing in this Agreement shall be construed as
restricting, in any manner, the application of any
provisions of the law of a Contracting State which aredesigned to prevent the avoidance or evasion of taxes aslong as those provisions are in accordance with the object
and purpose of the Agreement.
Article 22
Elimination of Double Taxation
1.
Subject to the provisions of the laws of Japan
regarding the allowance as a credit against Japanese tax oftax payable in any country other than Japan, where aresident of Japan derives income from the Federal Republicof Germany which may be taxed in the Federal Republic of
Germany in accordance with the provisions of thisAgreement, the amount of German tax payable in respect ofthat income shall be allowed as a credit against theJapanese tax imposed on that resident. The amount ofcredit, however, shall not exceed the amount of theJapanese tax which is appropriate to that income.

- 23 -

2.
Where a resident of the Federal Republic of Germany
derives income which, in accordance with the provisions of
this Agreement, may be taxed in Japan or is exempt fromJapanese tax under the provisions of paragraph 3 of Article
10, the following shall apply:(a)

Except as provided in subparagraph (c), theincome shall be exempted from the basis uponwhich German tax is imposed. In the case ofdividends, this applies only to such dividends as
are paid to a company (other than a partnership)
being a resident of the Federal Republic of
Germany by a company being a resident of Japan atleast 10 percent of the capital of which is owned
directly by the company being a resident of theFederal Republic of Germany. The exemption fromthe basis provided by the first sentence of thissubparagraph shall not apply to dividends paid bya tax exempt company, to dividends that the
distributing company may deduct for Japanese tax
purposes or to dividends that are attributed
under the law of the Federal Republic of Germany
to a person that is not a company being a
resident of the Federal Republic of Germany.

(b)

The Federal Republic of Germany retains the rightto take into account in the determination of its
rate of tax the items of income which under theprovisions of the Agreement are exempted from
German tax.

(c)

With respect to the following items of income,there shall be allowed as a credit against German
tax on income, subject to the provisions ofGerman tax law regarding credit for foreign tax,
Japanese tax paid under the laws of Japan and inaccordance with the provisions of the Agreementon such items of income:(i)

dividends within the meaning of Article 10
to which subparagraph (a) does not apply;(ii)

capital gains to which paragraph 2 ofArticle 13 applies;(iii)

income to which Article 15 applies;(iv)

income to which Article 16 applies;(v)

income to which paragraph 1 of Article 17
applies.

- 24 -

For the purposes of application of thissubparagraph, income of a resident of the Federal
Republic of Germany that, under the Agreement,
may be taxed in Japan shall be deemed to beincome from sources within Japan.
(d)

The provisions of subparagraph (a) are to be
applied to items of profits or income within themeaning of Article 7 and Article 10 and to gains
from the alienation of property within themeaning of paragraph 3 of Article 13 only to theextent that the items of profits, income or gains
were derived from the production, processing,working or assembling of goods and merchandise,the exploration and extraction of natural
resources, banking and insurance, trade or therendering of services or if the items of profits,
income or gains are economically attributable tothese activities. This applies only if abusiness undertaking that is adequately equipped
for its business purpose exists. If theprovisions of subparagraph (a) are not to be
applied, double taxation shall be eliminated bymeans of a tax credit as provided for in
subparagraph (c).

(e)

Notwithstanding subparagraph (a), double taxation
shall be eliminated by a tax credit as provided
for in subparagraph (c), if:(i)in the Contracting States items of income orelements thereof are placed under different
provisions of the Agreement and if, as aconsequence of this different placement,such income would be subject to double
taxation, non-taxation or lower taxation andin the case of double taxation this conflict
cannot be resolved by a procedure pursuant
to paragraph 2 or 3 of Article 24;(ii)Japan may, under the provisions of theAgreement, tax items of income or elements
thereof but does not actually do so; or- 25 -

(iii)

after consultation, the Federal Republic of
Germany notifies Japan through diplomaticchannels of items of income or elements
thereof to which it intends to apply theprovisions on tax credit under subparagraph(c). Double taxation is then eliminated forthe notified items of income or elements
thereof by allowing a tax credit from thefirst day of January in the calendar year
next following that in which thenotification was made.
Article 23
Non-Discrimination

1.
Nationals of a Contracting State shall not be
subjected in the other Contracting State to any taxation or
any requirement connected therewith, which is other or moreburdensome than the taxation and connected requirements towhich nationals of that other Contracting State in the same
circumstances, in particular with respect to residence, areor may be subjected. This provision shall, notwithstanding
the provisions of Article 1, also apply to persons who are
not residents of one or both of the Contracting States.
2.
The taxation on a permanent establishment which anenterprise of a Contracting State has in the other
Contracting State shall not be less favourably levied inthat other Contracting State than the taxation levied onenterprises of that other Contracting State carrying on thesame activities. This provision shall not be construed as
obliging a Contracting State to grant to residents of theother Contracting State any personal allowances, reliefs
and reductions for taxation purposes on account of civil
status or family responsibilities which it grants to its
own residents.
3.
Except where the provisions of paragraph 1 of Article
9, paragraph 4 of Article 11, paragraph 4 of Article 12 orparagraph 3 of Article 20 apply, interest, royalties andother disbursements paid by an enterprise of a Contracting
State to a resident of the other Contracting State shall,for the purposes of determining the taxable profits of suchenterprise, be deductible under the same conditions as if
they had been paid to a resident of the first-mentioned
Contracting State.

- 26 -

4.
Enterprises of a Contracting State, the capital ofwhich is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other
Contracting State, shall not be subjected in the firstmentioned Contracting State to any taxation or any
requirement connected therewith which is other or moreburdensome than the taxation and connected requirements towhich other similar enterprises of the first-mentioned
Contracting State are or may be subjected.
5.
The provisions of this Article shall, notwithstanding
the provisions of Article 2, apply to taxes of every kindand description imposed by a Contracting State, a federal
state (Land) thereof or a political subdivision or local
authority thereof.
Article 24
Mutual Agreement Procedure
1.
Where a person considers that the actions of one orboth of the Contracting States result or will result for
him in taxation not in accordance with the provisions of
this Agreement, he may, irrespective of the remedies
provided by the domestic law of those Contracting States,
present his case to the competent authority of theContracting State of which he is a resident or, if his casecomes under paragraph 1 of Article 23, to that of theContracting State of which he is a national. The case must
be presented within three years from the first notificationof the action resulting in taxation not in accordance withthe provisions of the Agreement.
2.
The competent authority shall endeavour, if theobjection appears to it to be justified and if it is notitself able to arrive at a satisfactory solution, toresolve the case by mutual agreement with the competentauthority of the other Contracting State, with a view tothe avoidance of taxation which is not in accordance withthe provisions of this Agreement. Any agreement reachedshall be implemented notwithstanding any time limits in thedomestic law of the Contracting States.
3.
The competent authorities of the Contracting Statesshall endeavour to resolve by mutual agreement any
difficulties or doubts arising as to the interpretation orapplication of this Agreement. They may also consult
together for the elimination of double taxation in cases
not provided for in the Agreement.

- 27 -

4.
The competent authorities of the Contracting States
may communicate with each other directly, including througha joint commission consisting of themselves or theirrepresentatives, for the purpose of reaching an agreementin the sense of the preceding paragraphs of this Article.
5.

Where,(a)under paragraph 1, a person has presented a caseto the competent authority of a Contracting Stateon the basis that the actions of one or both of
the Contracting States have resulted for that
person in taxation not in accordance with theprovisions of this Agreement, and(b)the competent authorities are unable to reach an
agreement to resolve that case pursuant toparagraph 2 within two years from thepresentation of the case to the competentauthority of the other Contracting State,

any unresolved issues arising from the case shall be
submitted to arbitration if the person so requests. These
unresolved issues shall not, however, be submitted toarbitration if a binding decision on these issues has
already been rendered by a court or administrative tribunalof either Contracting State, or if the competentauthorities of both Contracting States have agreed thatthese issues are not suitable for resolution througharbitration and have notified the presenter of the case ofsuch agreement within two years from the presentation of
the case to the competent authority of the other
Contracting State. Unless a person directly affected by
the case does not accept the mutual agreement that
implements the arbitration decision, that decision shall bebinding on both Contracting States and shall be implemented
notwithstanding any time limits in the domestic laws ofthese Contracting States. The competent authorities of theContracting States shall by mutual agreement settle themode of application of this paragraph.

- 28 -

Article 25
Exchange of Information
1.
The competent authorities of the Contracting Statesshall exchange such information as is foreseeably relevant
for carrying out the provisions of this Agreement or to theadministration or enforcement of the domestic laws
concerning taxes of every kind and description imposed onbehalf of the Contracting States, of any federal state(Land) thereof, or of any political subdivision or local
authority thereof, insofar as the taxation thereunder is
not contrary to the Agreement. The exchange of information
is not restricted by Articles 1 and 2.
2.
Any information received under paragraph 1 by aContracting State shall be treated as secret in the samemanner as information obtained under the domestic laws ofthat Contracting State and shall be disclosed only topersons or authorities (including courts and administrative
bodies) concerned with the assessment or collection of, theenforcement or prosecution in respect of, the determinationof appeals in relation to the taxes referred to inparagraph 1, or the oversight of the above. Such persons
or authorities shall use the information only for such
purposes. They may disclose the information in public
court proceedings or in judicial decisions. Notwithstanding
the foregoing, information received by a Contracting Statemay be used for other purposes when such information may be
used for such other purposes under the laws of bothContracting States and the competent authority of the other
Contracting State supplying the information provides priorauthorisation of such use.
3.
In no case shall the provisions of paragraphs 1 and 2
be construed so as to impose on a Contracting State theobligation:(a)

to carry out administrative measures at variancewith the laws and administrative practice of thator of the other Contracting State;(b)to supply information which is not obtainable
under the laws or in the normal course of theadministration of that or of the other
Contracting State;(c)to supply information which would disclose any
trade, business, industrial, commercial or
professional secret or trade process, orinformation the disclosure of which would becontrary to public policy (ordre public).

- 29 -

4.
If information is requested by a Contracting State inaccordance with this Article, the other Contracting State
shall use its information gathering measures to obtain therequested information, even though that other Contracting
State may not need such information for its own tax
purposes. The obligation contained in the preceding
sentence is subject to the limitations of paragraph 3 but
in no case shall such limitations be construed to permit aContracting State to decline to supply information solely
because it has no domestic interest in such information.
5.
In no case shall the provisions of paragraph 3 beconstrued to permit a Contracting State to decline tosupply information solely because the information is heldby a bank, other financial institution, nominee or person
acting in an agency or a fiduciary capacity or because it
relates to ownership interests in a person.
Article 26
Assistance in the Collection of Taxes
1.
The Contracting States shall lend assistance to eachother in the collection of revenue claims. This assistanceis not restricted by Articles 1 and 2.
2.
The term “revenue claim” as used in this Article means
an amount owed in respect of the following taxes, insofar
as the taxation thereunder is not contrary to thisAgreement or any other instrument to which the Contracting
States are parties, as well as interest, administrative
penalties and costs of collection or conservancy related tosuch amount:(a)in the case of Japan:(i)

the income tax;(ii)

the corporation tax;(iii)

the special income tax for reconstruction;(iv)

the special corporation tax forreconstruction;(v)

the local corporation tax;(vi)

the consumption tax;(vii)

the local consumption tax;

(viii)

the inheritance tax; and- 30 -

(ix)(b)

the gift tax;

in the case of the Federal Republic of Germany:(i)

the income tax (Einkommensteuer);(ii)

the corporate income tax(Körperschaftsteuer);(iii)

the solidarity surcharge(Solidaritätszuschlag);(iv)

the value added tax (Umsatzsteuer);(v)

the insurance tax (Versicherungsteuer);(vi)

the net wealth tax (Vermögensteuer);(vii)

the inheritance tax (Erbschaftsteuer);(viii)

the gift tax (Schenkungsteuer);(ix)

the trade tax (Gewerbesteuer); and(x)

the real estate acquisition tax(Grunderwerbsteuer);(c)any other tax as may be agreed upon from time totime between the Governments of the Contracting
States through an exchange of diplomatic notes;(d)any identical or substantially similar taxes thatare imposed after the date of signature of thisAgreement in addition to, or in place of, thetaxes covered by subparagraph (a), (b) or (c).

3.
When a revenue claim of a Contracting State isenforceable under the laws of that Contracting State and is
owed by a person who, at that time, cannot, under the lawsof that Contracting State, prevent its collection, thatrevenue claim shall, at the request of the competentauthority of that Contracting State, be accepted for
purposes of collection by the competent authority of theother Contracting State. That revenue claim shall becollected by that other Contracting State in accordancewith the provisions of its laws applicable to theenforcement and collection of its own taxes as if therevenue claim were a revenue claim of that other
Contracting State that met the conditions allowing that
other Contracting State to make a request under thisparagraph.

- 31 -

4.
When a revenue claim of a Contracting State is a claim
in respect of which that Contracting State may, under its
law, take measures of conservancy with a view to ensure its
collection, that revenue claim shall, at the request of thecompetent authority of that Contracting State, be acceptedfor purposes of taking measures of conservancy by thecompetent authority of the other Contracting State. Thatother Contracting State shall take measures of conservancy
in respect of that revenue claim in accordance with theprovisions of its laws as if the revenue claim were arevenue claim of that other Contracting State even if, at
the time when such measures are applied, the revenue claim
is not enforceable in the first-mentioned Contracting Stateor is owed by a person who has a right to prevent its
collection.
5.
Notwithstanding the provisions of paragraphs 3 and 4,
a revenue claim accepted by the competent authority of aContracting State for purposes of paragraph 3 or 4 shallnot, in that Contracting State, be subject to the time
limits or accorded any priority applicable to a revenue
claim under the laws of that Contracting State by reason of
its nature as such. In addition, a revenue claim acceptedby the competent authority of a Contracting State for the
purposes of paragraph 3 or 4 shall not, in that Contracting
State, have any priority applicable to that revenue claim
under the laws of the other Contracting State.
6.
Notwithstanding the provisions of paragraph 5, acts
carried out by a Contracting State in the collection of arevenue claim accepted by the competent authority of thatContracting State for purposes of paragraph 3 or 4, which,if they were carried out by the other Contracting State,would have the effect of suspending or interrupting thetime limits applicable to the revenue claim according to
the laws of that other Contracting State, shall have such
effect under the laws of that other Contracting State. The
first-mentioned Contracting State shall inform the other
Contracting State about such acts.
7.
Proceedings with respect to the existence, validity or
the amount of a revenue claim of a Contracting State shallnot be brought before the courts or administrative bodiesof the other Contracting State.
8.
Where, at any time after a request has been made by
the competent authority of a Contracting State underparagraph 3 or 4 and before the other Contracting State hascollected and remitted the relevant revenue claim to thefirst-mentioned Contracting State, the relevant revenue
claim ceases to be- 32 -

(a)in the case of a request under paragraph 3, arevenue claim of the first-mentioned Contracting
State that is enforceable under the laws of thatContracting State and is owed by a person who, atthat time, cannot, under the laws of thatContracting State, prevent its collection, or(b)

in the case of a request under paragraph 4, arevenue claim of the first-mentioned Contracting
State in respect of which that Contracting State
may, under its laws, take measures of conservancy
with a view to ensure its collection

the competent authority of the first-mentioned Contracting
State shall promptly notify the competent authority of theother Contracting State of that fact and, at the option of
the other Contracting State, the first-mentioned
Contracting State shall either suspend or withdraw its
request.
9.
In no case shall the provisions of this Article beconstrued so as to impose on a Contracting State theobligation:(a)

to carry out administrative measures at variancewith the laws and administrative practice of thator of the other Contracting State;(b)

to carry out measures which would be contrary to
public policy (ordre public);(c)

to provide assistance if the other Contracting
State has not pursued all reasonable measures ofcollection or conservancy, as the case may be,available under its laws or administrative
practice;(d)to provide assistance in those cases where theadministrative burden for that Contracting Stateis clearly disproportionate to the benefit to be
derived by the other Contracting State.

10. Before assistance is lent under the provisions of this
Article, the competent authorities of both Contracting
States shall agree upon the mode of application of this
Article, including an agreement to ensure comparable levelsof assistance to each of the Contracting States. In
particular, the competent authorities of both Contracting
States shall agree on a limit to the number of requests forassistance that a Contracting State may make in aparticular year and a minimum monetary threshold for arevenue claim for which assistance is sought.

- 33 -

Article 27
Procedural Rules for Taxation at Source
1.
If in a Contracting State the taxes on dividends,
interest, royalties or other items of income derived by aperson who is a resident of the other Contracting State arelevied by withholding at source, the right of the firstmentioned Contracting State to apply the withholding of tax
at the rate provided under its domestic law shall not beaffected by the provisions of this Agreement. The tax
withheld at source shall be refunded on application by the
taxpayer if and to the extent that it is reduced or ceases
to be levied in accordance with the Agreement.
2.
Applications for refund of the withholding taxes of aContracting State which are subject to reduction or
exemption under this Agreement shall be submitted within
the period provided for in the domestic law of thatContracting State.
3.
Each Contracting State may provide for procedures tothe effect that payments of income subject under thisAgreement to no tax or only to reduced tax in theContracting State in which the income arises may be madewithout deduction of tax or with deduction of tax only at
the rate provided in the relevant Article of the Agreement.
4.
The Contracting State in which the items of income
arise may require the taxpayer to provide certification of
his residence in the other Contracting State issued by thecompetent authority of that other Contracting State.
5.
The competent authorities of the Contracting States
may determine the mode of implementation of this Article bymutual agreement in accordance with the domestic law ofeach Contracting State.
Article 28
Members of Diplomatic Missions and Consular Posts
Nothing in this Agreement shall affect the fiscal
privileges of members of diplomatic missions or consular
posts under the general rules of international law or under
the provisions of special agreements.
Article 29
Headings
The headings of the Articles of this Agreement are
inserted for convenience of reference only and shall notaffect the interpretation of the Agreement.

- 34 -

Article 30
ProtocolThe Protocol attached to this Agreement shall form an
integral part thereof.
Article 31
Entry into Force
1.
Each of the Contracting States shall send in writing
and through diplomatic channels to the other Contracting
State the notification confirming that its internal
procedures necessary for the entry into force of thisAgreement have been completed. The Agreement shall enter
into force on the thirtieth day after the date of receiptof the latter notification.
2.

This Agreement shall be applicable:
(a)

(b)

in the case of Japan:(i)in the case of taxes levied on the basis ofa taxable year, for taxes for any taxable
years beginning on or after the first day ofJanuary in the calendar year next followingthat in which the Agreement enters into
force; and(ii)

in the case of taxes not levied on the basisof a taxable year, for taxes levied on orafter the first day of January in thecalendar year next following that in which
the Agreement enters into force; andin the case of the Federal Republic of Germany:(i)in the case of taxes withheld at source, inrespect of amounts paid on or after the
first day of January in the calendar year
next following that in which the Agreement
enters into force; and(ii)

in the case of other taxes, in respect oftaxes levied for periods beginning on orafter the first day of January in thecalendar year next following that in which
the Agreement enters into force.

- 35 -

3.
Notwithstanding the provisions of paragraph 2, theprovisions of Article 25 shall have effect from the date ofentry into force of this Agreement, without regard to thedate on which the taxes are levied or the taxable year towhich the taxes relate.
4.
The Agreement between Japan and the Federal Republicof Germany for the Avoidance of Double Taxation withrespect to Taxes on Income and to certain other Taxes
signed at Bonn on 22 April 1966, as modified andsupplemented by the Protocol signed at Tokyo on 17 April
1979 and the Second Protocol signed at Bonn on 17 February
1983 (hereinafter referred to as “the prior Agreement”),
shall cease to be effective from the date upon which thisAgreement shall be applicable in respect of the taxes towhich the Agreement applies in accordance with theprovisions of paragraph 2.
5.
In respect of the capital tax to which the priorAgreement applies, the prior Agreement shall cease to beeffective from the date upon which this Agreement enters
into force.
6.
The prior Agreement shall terminate on the entry into
force of this Agreement.
7.
Notwithstanding the provisions of paragraph 6, theprovisions of the prior Agreement shall continue to apply
to tax cases having occurred prior to the date upon which
this Agreement has become applicable in accordance with theprovisions of this Article.
8.
Notwithstanding the entry into force of thisAgreement, an individual who is entitled to the benefits ofArticle 20 of the prior Agreement at the time of the entry
into force of the Agreement shall continue to be entitledto such benefits until such time as the individual would
have ceased to be entitled to such benefits if theAgreement had not entered into force.
Article 32
Termination
This Agreement shall remain in force until terminatedby a Contracting State. Either Contracting State may
terminate the Agreement, through diplomatic channels, bygiving notice of termination at least six months before theend of any calendar year beginning after expiry of five
years from the date of entry into force of the Agreement.
In such event, the Agreement shall cease to have effect:- 36 -

(a)in the case of Japan:(i)in the case of taxes levied on the basis ofa taxable year, for taxes for any taxable
years beginning on or after the first day ofJanuary in the calendar year next followingthat in which the notice of termination is
given; and(ii)

in the case of taxes not levied on the basisof a taxable year, for taxes levied on orafter the first day of January in thecalendar year next following that in which
the notice of termination is given; and(b)in the case of the Federal Republic of Germany:(i)in the case of taxes withheld at source, inrespect of amounts paid on or after the
first day of January in the calendar year
next following that in which the notice oftermination is given; and(ii)

in the case of other taxes, in respect oftaxes levied for periods beginning on orafter the first day of January in thecalendar year next following that in which
the notice of termination is given.

The notice of termination shall be regarded as having
been given by a Contracting State on the date of receipt ofsuch notice by the other Contracting State.
IN WITNESS WHEREOF the undersigned, being duly
authorised thereto, have signed this Agreement.
DONE at Tokyo on this seventeenth day of December 2015
in two originals, each in the Japanese, German and English
languages, all three texts being authentic. In the casethere is any divergence of interpretation between theJapanese and the German texts, the English text shallprevail.
For Japan:

For the Federal Republicof Germany:
Hans Carl Freiherr
von Werthern

武藤容治- 37 -

Protocol
At the signing of the Agreement between Japan and theFederal Republic of Germany for the Elimination of Double
Taxation with respect to Taxes on Income and to certain
other Taxes and the Prevention of Tax Evasion and Avoidance(hereinafter referred to as “the Agreement”) at Tokyo on 17
December 2015, Japan and the Federal Republic of Germany
have agreed upon the following provisions, which shall form
an integral part of the Agreement.
1.

With reference to Article 2 of the Agreement:

The provisions of the Agreement in respect of taxationof income shall mutatis mutandis apply to the enterprise
tax of Japan and the trade tax (Gewerbesteuer) of theFederal Republic of Germany and any identical or
substantially similar taxes that are imposed after the dateof signature of the Agreement in addition to, or in placeof those taxes to the extent that they are computed on abasis, or by taking into account any elements, other thanincome.
2.
With reference to paragraph 1 of Article 4 of theAgreement:
It is understood that a person is “liable to tax” in aContracting State even where all or part of its income isexempted from tax in that Contracting State by satisfying
the requirements for exemption specified in the tax laws ofthat Contracting State.
3.

With reference to Articles 6 to 20 of the Agreement:

Where, pursuant to any provision of the Agreement, aContracting State reduces the rate of tax on, or exempts
from tax, income of a resident of the other Contracting
State and under the laws in force in that other Contracting
State the resident is subjected to tax by that other
Contracting State only on that part of such income which isremitted to or received in that other Contracting State,then the reduction or exemption shall apply only to so muchof such income as is remitted to or received in that other
Contracting State.

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4.

Notwithstanding any provisions of the Agreement:
(a)

(b)

5.

in the case of Japan, the following income orgains arising in Japan may be taxed in Japanaccording to the laws of Japan:(i)

dividends paid by a company which isentitled to a deduction for dividends paid
to its beneficiaries in computing its
taxable income for Japanese tax;

(ii)

interest that is determined by reference toreceipts, sales, income, profits or othercash flow of the debtor or a related person,
to any change in the value of any propertyof the debtor or a related person or to any
dividend, partnership distribution orsimilar payment made by the debtor or a
related person, or any other interest
similar to such interest; or(iii)

income or gains derived by a silent partner
in respect of a silent partnership (Tokumei
Kumiai) contract or other similar contract,orin the case of the Federal Republic of Germany,
any income arising in the Federal Republic of
Germany may be taxed in the Federal Republic of
Germany according to the laws of the Federal
Republic of Germany, if it:(i)is derived from rights or debt claims
carrying a right to participate in profits,
including income derived by a silent partner(stiller Gesellschafter) from his
participation as such, or from a loan withan interest rate linked to borrower’s profit(partiarisches Darlehen) or from profit
sharing bonds (Gewinnobligationen) within
the meaning of the tax law of the Federal
Republic of Germany; and(ii)

is deductible in the determination of
profits of the debtor of such income.

With reference to Article 10 of the Agreement:(a)

It is understood that distributions on
certificates of a German investment fund aretreated as dividends.

- 39 -

(b)Notwithstanding the provisions of that Article,
subparagraph (a) of paragraph 2 and paragraph 3of that Article shall not apply to dividends paidby a German real estate investment trust company
with listed share capital (Real Estate Investment
Trust Aktiengesellschaft) and by a German
investment fund.

(c)

For purposes of subparagraphs (a) and (b), theterm “German investment fund” means a vehicle(not established as a partnership) within themeaning of the Investment Act of the Federal
Republic of Germany (Kapitalanlagegesetzbuch)that is widely held and that holds a diversified
portfolio of securities or invests directly or
indirectly in real property for the main purposeof deriving rent.

6.
With reference to paragraph 5 of Article 21 of theAgreement:
It is understood that subparagraph (c) of thatparagraph applies only to persons who are residents of, andbusiness conducted in, the same Contracting State.
7.
With reference to paragraph 9 of Article 21 of theAgreement:
It is understood that the provisions of the law of aContracting State which are designed to prevent the
avoidance or evasion of taxes include:(a)in the case of Japan, Section 4-2 of Chapter II
and Sections 7-4 and 24 of Chapter III of the Law
on Special Measures Concerning Taxation (Law
No. 26 of 1957) of Japan;(b)in the case of the Federal Republic of Germany,
Parts 4, 5 and 7 of the German External Tax
Relations Act (Außensteuergesetz), Section 42 of
the German Fiscal Code (Abgabenordnung) andparagraph 3 of Section 50d of the German Income
Tax Act (Einkommensteuergesetz).

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8.

With reference to Article 22 of the Agreement:

It is understood that the provisions of that Article
shall not be construed as obligating Japan to allow any
amount of German tax to be credited against the enterprise
tax of Japan nor obligating the Federal Republic of Germany
to allow any amount of Japanese tax to be credited against
the trade tax of the Federal Republic of Germany.
9.

With reference to Article 23 of the Agreement:

It is understood that the provisions of that Article
shall not be construed as obligating a Contracting State topermit cross-border consolidation of income or similar
benefits between an enterprise of that Contracting Stateand an enterprise of the other Contracting State.
10. With reference to paragraph 5 of Article 24 of theAgreement:(a)

The competent authorities shall by mutual
agreement establish a standard procedure in order
to seek to ensure that an arbitration decision
will be implemented within two years from arequest for arbitration as referred to inparagraph 5 of Article 24 of the Agreement andshall use their best endeavours to follow theprocedure.

(b)

An arbitration panel shall be established inaccordance with the following rules:(i)

An arbitration panel shall consist of threearbitrators with expertise or experience ininternational tax matters.

(ii)

Each competent authority shall appoint one
arbitrator. The two arbitrators appointed
by the competent authorities shall appoint
the third arbitrator who serves as the chairof the arbitration panel in accordance withthe procedures agreed by the competentauthorities.

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(iii)All arbitrators shall not be employees of
the tax authorities of the Contracting
States, nor have dealt with the casepresented pursuant to paragraph 1 of Article
24 of the Agreement in any capacity. The
third arbitrator shall not be a national ofeither Contracting State, nor have had his
usual place of residence in either
Contracting State, nor have been employed byeither Contracting State.

(iv)

The competent authorities shall ensure that
all arbitrators and their staff agree, instatements sent to each competent authority,
prior to their acting in an arbitration
proceeding, to abide by and be subject tothe same confidentiality and non-disclosure
obligations as those described in paragraph
2 of Article 25 of the Agreement and under
the applicable domestic laws of theContracting States.

(v)

Each competent authority shall bear thecosts of its appointed arbitrator and its
own expenses. The costs of the chair of anarbitration panel and other expenses
associated with the conduct of theproceedings shall be borne by the competentauthorities in equal shares.

(c)

The competent authorities shall provide theinformation necessary for the arbitration
decision to all arbitrators and their staff
without undue delay.

(d)An arbitration decision shall be treated asfollows:(i)

An arbitration decision has no formal
precedential value.

- 42 -(ii)(e)

An arbitration decision shall be final,
unless that decision is found to be
unenforceable by the courts of one of theContracting States due to a violation ofparagraph 5 of Article 24 of the Agreement,of this paragraph or of any procedural rule
determined in accordance with subparagraph(a) that may reasonably have affected thedecision. If the decision is found to be
unenforceable due to the violation, therequest for arbitration shall be considered
not to have been made and the arbitration
proceedings shall be considered not to havetaken place (except for the purposes ofclauses (iv) and (v) of subparagraph (b)).

If at any time before the arbitration paneldelivers a determination to the competentauthorities of the Contracting States:(i)the competent authorities of the Contracting
States reach a mutual agreement to resolve
the case pursuant to paragraph 2 of Article
24 of the Agreement;(ii)

the presenter of the case withdraws therequest for arbitration; or(iii)

a binding decision concerning the case isrendered by a court or administrative
tribunal of one of the Contracting States
during the arbitration proceedings;

the mutual agreement procedure, including thearbitration proceedings, with respect to the caseshall terminate.
(f)

In the event a case is pending in litigation orappeal, the mutual agreement that implements thearbitration decision shall be considered not tobe accepted by the presenter of the case if any
person directly affected by the case who is aparty to the litigation or appeal does notwithdraw within 60 days after receiving thedetermination of the arbitration panel fromconsideration by the relevant court oradministrative tribunal all issues resolved in
the arbitration proceeding. In this case, thecase will not be eligible for any further
consideration by the competent authorities.

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11.

(g)

The provisions of paragraph 5 of Article 24 of
the Agreement and this paragraph shall not apply
to cases falling within paragraph 3 of Article 4of the Agreement.

(h)

The provisions of paragraph 5 of Article 24 of
the Agreement and this paragraph shall apply
mutatis mutandis to a case presented pursuant toparagraph 1 of Article 25 of the Agreement
between Japan and the Federal Republic of Germany
for the Avoidance of Double Taxation with respect
to Taxes on Income and to certain other Taxes,
signed at Bonn on 22 April 1966, as modified andsupplemented by the Protocol signed at Tokyo on
17 April 1979 and the Second Protocol signed atBonn on 17 February 1983 only when the competentauthorities of the Contracting States have agreed
that the case is suitable for resolution througharbitration. No unresolved issues of such case,however, shall be submitted to arbitration
earlier than the day on which two years haveelapsed from the entry into force of theAgreement.

With reference to Article 25 of the Agreement:

Insofar as personal information is exchanged underthat Article, the following provisions shall apply:(a)

The competent authority of a Contracting State
which receives information (hereinafter referred
to as “the receiving authority”) may use suchinformation in compliance with paragraph 2 ofArticle 25 of the Agreement only for the purpose
stated by the competent authority of the other
Contracting State which supplies information(hereinafter referred to as “the supplying
authority”) and shall be subject to theconditions prescribed by the supplying authority
to ensure compliance with that paragraph.

(b)

The supplying authority shall endeavour to ensurethat the information to be supplied is accurate
and foreseeably relevant within the meaning of
the first sentence of paragraph 1 of Article 25of the Agreement and that it is necessary for andcommensurate with the purpose for which it issupplied.

- 44 -

Information is foreseeably relevant if in theconcrete case at hand there is the serious
possibility that the Contracting State of which
the receiving authority is the competentauthority has a right to tax and there is nothing
to indicate that the information is already known
to the receiving authority or that the receiving
authority would learn of the taxable object
without that information.
If the supplying authority discovers that it has
supplied inaccurate information or information
which should not have been supplied, it shallinform the receiving authority of this without
delay.
The receiving authority shall correct or erase
such information without delay.
(c)

In any case, the receiving authority shall erase
the information supplied that is not or no longer
required for the purpose for which it was
supplied.

(d)

The receiving authority shall inform the
supplying authority (in the case of information
provided on request or spontaneously, on a caseby-case basis) about whether the information
supplied has been used if the supplying authority
so requests.

(e)

The receiving authority shall inform, in
accordance with its domestic law, a person of the
supplied information in respect of him and of the
purpose for which the information is to be used.

(f)

The Contracting States shall bear liability inaccordance with their domestic laws in relation
to any person suffering unlawful damage inconnection with the exchange of information.

(g)

The competent authorities of the Contracting
States shall keep records of the exchange of
information.

(h)

The supplying authority may inform the receiving
authority of the provisions for the deletion of
the personal information under the domestic lawof the Contracting State of which the supplying
authority is the competent authority.

- 45 -

(i)The competent authorities of the Contracting
States shall take necessary measures to protect
information supplied against unauthorised access,alteration or disclosure.

12. With reference to paragraph 2 of Article 25 of theAgreement:
In the event that information received by aContracting State is needed to be used by that Contracting
State as evidence or otherwise in non-tax criminal
proceedings carried out by a court or a judge, thatContracting State shall, in order to use such information
as evidence or otherwise in non-tax criminal proceedings
carried out by a court or a judge, submit a request inaccordance with the Agreement between Japan and theEuropean Union on Mutual Legal Assistance in Criminal
Matters signed at Brussels on 30 November 2009 and at Tokyo
on 15 December 2009.
IN WITNESS WHEREOF the undersigned, being duly
authorised thereto, have signed this Protocol.
DONE at Tokyo on this seventeenth day of December 2015
in two originals, each in the Japanese, German and English
languages, all three texts being authentic. In the casethere is any divergence of interpretation between theJapanese and the German texts, the English text shallprevail.
For Japan:

For the Federal Republicof Germany:
Hans Carl Freiherr
von Werthern

武藤容治- 46 -