PROTOCOL

 AMENDING THE CONVENTION BETWEEN

 THE UNITED STATES OF AMERICA

AND

THE FEDERAL REPUBLIC OF GERMANY 

FOR THE AVOIDANCE OF DOUBLE TAXATION

WITH RESPECT TO TAXES ON ESTATES, INHERITANCES, AND GIFTS, 

 SIGNED AT BONN ON DECEMBER 3, 1980
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The United States of America and the Federal Republic

of Germany, desiring to conclude a Protocol to amend the

Convention Between the United States of America and the

Federal Republic of Germany For the Avoidance of Double

Taxation with Respect to Taxes on Estates, Inheritances, and

Gifts, signed at Bonn on December 3, 1980 (hereinafter

referred to as "the Convention"), have agreed as follows:

ARTICLE 1

Subparagraph c) of paragraph 3 of Article 4 (Fiscal

Domicile) of the Convention shall be replaced by the

following: 

"c) by reason of the provisions of paragraph 1

domiciled in the other Contracting State for not more

than ten years,". 

ARTICLE 2

The following sentence shall be added to the end of

paragraph 4 of Article 10 (Deductions and Exemptions) of the

Convention:

"The provisions of this paragraph shall not apply

to a citizen of the United States of America domiciled

in the Federal Republic of Germany or a former citizen

or long-term resident of the United States of America
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referred to in subparagraph a) of paragraph 1 of

Article 11."

ARTICLE 3

New paragraphs 5 and 6 shall be added to Article 10

(Deductions and Exemptions) of the Convention as follows:

"5. In determining the estate tax imposed by the

United States of America, the estate of a decedent

(other than a citizen of the United States of America)

who was domiciled in the Federal Republic of Germany at

the time of the decedent’s death shall be allowed a

unified credit equal to the greater of:

a) The amount that bears the same ratio to

the credit allowed to the estate of a citizen of

the United States of America under the law of the

United States of America as the value of the part

of the decedent’s gross estate that at the time of

the decedent’s death is situated in the United

States of America bears to the value of the

decedent’s entire gross estate wherever situated;

or

b) The unified credit allowed to the estate

of a nonresident not a citizen of the United

States of America under the law of the United

States of America.
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The amount of any unified credit otherwise allowable

under this paragraph shall be reduced by the amount of

any credit previously allowed with respect to any gift

made by the decedent. For purposes of subparagraph a),

the part of the decedent’s gross estate that is

situated in the United States of America shall not

exceed the part of the decedent’s gross estate that may

be taxed by the United States of America in accordance

with this Convention. A credit otherwise allowable

under subparagraph a) shall be allowed only if all

information necessary for the verification and

computation of the credit is provided.

6. In determining the estate tax imposed by the

United States of America, the value of the decedent’s

taxable estate shall be determined by deducting from

the value of the gross estate an amount equal to the

value of any interest in property that passes to the

decedent’s surviving spouse (within the meaning of the

law of the United States of America) and that would

qualify for the estate tax marital deduction under the

law of the United States of America if the surviving

spouse were a citizen of the United States of America

and all applicable elections were properly made

(hereinafter referred to as "qualifying property"). The
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decedent’s estate shall be entitled to such marital

deduction provided that:

a) At the time of the decedent’s death, the

decedent was domiciled in either the Federal

Republic of Germany or the United States of

America;

b) The decedent’s surviving spouse was at the

time of the decedent’s death domiciled in either

the Federal Republic of Germany or the United

States of America;

c) If both the decedent and the decedent’s

surviving spouse were domiciled in the United

States of America at the time of the decedent’s

death, one or both was a citizen of the Federal

Republic of Germany; and

d) The executor of the decedent’s estate

elects the benefits of this paragraph and

irrevocably waives the benefits of any other

estate tax marital deduction that would be allowed

under the law of the United States of America on a

United States estate tax return filed for the

decedent’s estate by the date on which a qualified
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domestic trust election could be made under the

law of the United States of America.

The marital deduction allowed under this paragraph

shall be equal to the lesser of the value of the

qualifying property or the applicable exclusion amount

(within the meaning of the law of the United States of

America, determined without regard to any gift

previously made by the decedent)."

ARTICLE 4

Paragraph 1 of Article 11 (Credits) of the Convention shall

be replaced by the following:

"1. The provisions of this Convention shall not

preclude

a) the United States of America from taxing

in accordance with its law the estate of a

decedent or the gift of a donor who, at his death

or at the making of the gift, was: 

i) a citizen of the United States of

America, 

ii) domiciled (within the meaning of

Article 4) in the United States of America,

or 
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iii) a former citizen or long-term

resident whose loss of such status had as one

of its principal purposes the avoidance of

tax (as defined under the laws of the United

States of America), but only for a period of

ten years following such loss;

b) the Federal Republic of Germany from

taxing in accordance with its law an heir, a

donee, or another beneficiary who was domiciled

(within the meaning of Article 4) in the Federal

Republic of Germany at the time of the death of

the decedent or the making of the gift.

The preceding sentence shall not, however, apply to

paragraphs 2, 3, and 4 of Article 10, paragraphs 2, 3,

4 and 5 of this Article, and Article 13; or paragraphs

5 or 6 of Article 10 as applied to the estates of

persons other than former citizens and long-term

residents referred to in the preceding sentence."
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ARTICLE 5

1. This Protocol shall be subject to ratification in

accordance with the applicable procedures in the United

States of America and the Federal Republic of Germany and

instruments of ratification shall be exchanged as soon as

possible.

2. This Protocol shall enter into force upon the exchange

of instruments of ratification and shall have effect with

respect to deaths occurring after that date.

3. Notwithstanding the foregoing provisions of paragraph 2

of this Article, Articles 3 and 4 of this Protocol shall,

notwithstanding any limitation imposed under the law of a

Contracting State on the assessment, reassessment or refund

with respect to a person’s or estate’s return, have effect

with respect to deaths occurring after November 10, 1988,

provided that any return or claim for refund asserting the

benefits of this Protocol shall be filed within one year of

the date on which this Protocol enters into force or within

the otherwise applicable period for filing such claims under

domestic law.

IN WITNESS WHEREOF, the undersigned, being duly

authorized thereto, have signed this Protocol.
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DONE at Washington, in duplicate, this 14th day of

December, 1998, in the English and German languages, both

texts being equally authentic.

FOR THE UNITED STATES FOR THE FEDERAL REPUBLIC

OF AMERICA: OF GERMANY: