Germany and the Netherlands signed a new double taxation treaty on 12 April 2012. This new double taxation treaty ⦣8364;" which still has to be ratified by both countries ⦣8364;" is expected to enter into effect as from 1 January 2014. The new treaty replaces the current treaty entered into in 1959 and is to a large extent modelled on the basis of the 2010 OECD Model Convention. Distinctive features of the new treaty are:

  • Dutch tax exempt entities have access to treaty benefits, subject to application of anti-abuse rules which rules will in any case be applied by Germany to Dutch exempt investment institutions (vrijgestelde beleggingsinstellingen).
  • A provision regarding the application of the treaty to hybrid entities is included which is modelled on the basis of the OECD standard.
  • Gains derived from the disposal of shares in a non-public real estate company by a more than 50% shareholder may be taxed by the contracting state where the real estate is located. A company qualifies as real estate company if 75% or more of its value is derived from real estate located in that contracting state. The other contracting state must give a tax credit for taxes levied by the state where the real estate is located.
  • The treaty explicitly allows application of domestic anti-abuse provisions, which include German anti-treaty shopping and CFC rules.
  • No withholding tax on interest and royalties is allowed by the treaty.

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