On or about 9 December 2019, Singapore and Germany signed a Protocol amending the 28 June 2004 Agreement for the Avoidance of Double Taxation with respect to Taxes on Income and on Capital (“Protocol”).
The Protocol seeks to enhance the cross-border trade and investment between both countries, by lowering the withholding tax rates on income flows arising from cross-border business activities.
The Protocol also incorporates internationally agreed minimum standards to counter treaty abuse and amends the Exchange of Information Article to be in line with the internationally agreed standard on exchange of information on request. It updates the Mutual Agreement Procedure (MAP) Article to provide a mechanism that allows taxpayers to request for the arbitration of eligible MAP cases that have remained unresolved between the competent authorities of Singapore and Germany for three years.
The Protocol has made the following key changes:
- Article 5 (Permanent Establishment): Longer period test for construction-related activities
- Article 10 (Dividends): Lower dividend withholding tax rate
- Article 11 (Interest): Lower interest withholding tax rate
- Article 12 (Royalties): Lower royalties withholding tax rate
For more information, please visit the IRAS website.
Source: IRAS website, 10 December 2019