Joint Declaration

by the United States of America and the Federal Republic of Germany 

on the Occasion 

of the Signing on 1 June 2006

of the Protocol Amending the Convention 

Between the United States of America andthe Federal Republic of Germany for 

the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with 

Respect to Taxes on Income and Capital and to Certain Other Taxes

Signed on 29th August 1989 

The United States of America and the Federal Republic of Germany on the occasion of the 

signing on 1 June 2006 of the Protocol Amending the Convention Between the United States 

of America and the Federal Republic of Germany for the Avoidance of Double Taxation and 

the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital and to Certain 

Other Taxes signed on 29th August 1989 (hereafter “Protocol of 1 June 2006”), and with 

regard to Article 18 (Pensions, Annuities, Alimony, Child Support, and Social Security) of the 

Convention as amended by the Protocol of 1 June 2006, in which it is agreed that pensions 

and other similar remuneration paid in consideration of past employment as well as benefits 

paid under the social security legislation of a Contracting State shall be taxable only in the 

Contracting State of which the recipient of that pension or benefits on the basis of the social 

security legislation is a resident, 

Have reached the following understanding: 

I. 

1. The Federal Republic of Germany draws attention to the fact 
a) that, effective as of 1 January 2005, legisla tion introduced on 5 July 2004 (Federal 

Law Gazette part I page 1427) has fundamentally changed in the Federal Republic of 

Germany the taxation of retirement income, 

b) that these changes combine full taxation of retirement income with extended tax 

exemption of contributions to pension plans. 

2. The Federal Republic of Germany therefore expresses its conviction 

a) that, as a result of these legislative changes, Article 18 of the Convention as amended 

by the Protocol of 1 June 2006 should be further amended to such effect as to also 

provide for the taxation of retirement income in the Contracting State in which the 

income arises or in which the contributions to the pension plan were exempt from 

taxation; 

b) that taking into account the successive implementation in the Federal Republic of 

Germany of the taxation of retirement income, as amended by legislation of 5 July 

2004, any further amendment to Article 18 of the Convention of 29 August 1989 as 

amended by the Protocol of 1 June 2006 should not enter into force before 1 January 

2015. 

II. 

The Federal Republic of Germany and the United States of America therefore reaffirm their 

intentions declared during negotiations on the Protocol of 1 June 2006 to enter into 

consultations at the appropriate time, but not before 1 January 2013, with a view to further 

amending Article 18 of the Convention as amended by the Protocol of 1 June 2006 to allow 

for the taxation of retirement income in the Contracting State in which the income arises 

based on the following principles: 
1. Benefits paid under the social security legislation of a Contracting State may also be taxed 

by that Contracting State; the tax may not however exceed 15 percent of the gross amount of 

such payments; 

2. Pensions and other similar remuneration paid in consideration of past employment may 

also be taxed in the Contracting State in which the employment had been exercised for a 

substantial period of time; the tax may not however exceed 15 percent of the gross amount of 

such payments. 

This Joint Declaration is signed in duplicate, in the Englishand German languages. 

Berlin, 1 June 2006 

FOR THE FOR THE 

UNITED STATES OF AMERICA: FEDERAL REPUBLIC OF GERMANY: