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New Australian tax treaty with Germany
Australia and Germany recently signed a “new 21st Century tax treaty”, which will reduce tax impediments to increased bilateral trade and investment and improve the integrity of the tax system”.
This is the first treaty concluded by Australia since the OECD reports were released on 5 October 2015. The new treaty adopts most of the OECD’s recommended treaty changes, in particular in respect of:
Action 2: fiscally transparent entities
Action 6: treaty abuse
Action 7: artificial avoidance of permanent establishment status and
Action 14: dispute resolution
Australian and German cross border investors should review existing structures and income flows to identify the potential risks and benefits under the New treaty.