The income and capital tax treaty between Armenia and German entered into force on 23 November 2017. The treaty, signed 29 June 2016, replaces the 1981 tax treaty between Germany and the former Soviet Union as it applied in respect of Armenia and Germany.
The treaty covers Armenian profit tax, income tax, and property tax. It covers German income tax, corporate income tax, trade tax, and capital tax.
If a company is considered resident in both Contracting States, the competent authorities of both States will determine its residence for the purpose of the treaty through mutual agreement. If no agreement is reached, the company will not be considered a resident of either State for the purpose of claiming any benefit provided by the treaty.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Armenia applies the credit method for the elimination of double taxation. Germany generally applies the exemption method, including for dividends when the beneficial owner is a German company that owns at least 10% of the capital of the Armenian payer, and the payer is not tax exempt or able to deduct the dividends. However, Germany applies the credit method for dividends not qualifying for exemption, interest, royalties, capital gains from shares or interests deriving at least 50% of their value from immovable property situated in the other State, and certain other items of income in accordance with German tax law.
The treaty generally applies from 1 January 2018, although Article 26 (Assistance in the Collection of Taxes) will apply as soon as the competent authorities have so agreed by mutual agreement in accordance with Article 24 (Mutual Agreement Procedure).
The 1981 tax treaty between Germany and the former Soviet Union ceased to apply in respect of Armenia and Germany on the date the Armenia-Germany tax treaty was effective.
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