Details of the income tax treaty and protocol between Turkey and Germany, signed on 19 September 2011, have become available. The treaty was concluded in the Turkish, German and English languages, each text having equal authenticity. The treaty generally follows the OECD Model Convention.

The maximum rates of withholding tax are:

-		15% on dividends in general (Art. 10(2)(b) of the treaty) and 5% if the beneficial owner is a company (other than a partnership) which holds directly at least 25% of the capital of the company paying the dividends (Art. 10(2)(a) of the treaty);
-		10% on interest (Art. 11(2) of the treaty), subject to exceptions; and
-		10% on royalties (Art. 12(2) of the treaty).

Deviations from the OECD Model include:

-		a building site, a construction, assembly or installation project or supervisory activities in connection therewith constitutes a permanent establishment (PE) but only if such building site, project or activities last more than 6 months (Art. 5(3)(a) of the treaty);
-		the furnishing of services, including consultancy services, by an enterprise of a contracting state through employees or other personnel engaged by the enterprise for such purposes in the other contracting state constitutes a PE but only if such activities continue (for the same or a connected project) within that state for a period or periods aggregating more than 6 months within any 12-month period (Art. 5(3)(b) of the treaty);
-		income from immovable property includes also the income from immovable property used for the performance of independent personal services (Art. 6(4) of the treaty);
-		profits of an enterprise of a contracting state derived from the other contracting state from the operation of ships or aircraft in international traffic shall be taxable only in the first-mentioned (residence) state (Art. 8(1) of the treaty);
-		Art. 12 follows the UN Model Convention. Accordingly, royalties arising in a contracting state and paid to a resident of the other contracting state may be taxed in that other state (Art. 12(1) of the treaty). Furthermore, the term "royalties" shall also include the payments for the use of, or the right to use of recordings for radio and television, and a person's name, picture or any other similar personality rights (Art. 12(3) of the treaty);
-		capital gains generally may be taxed in the alienator's residence state; however, gains from the alienation of any property other than referred to in Art. 13(1)-(4) and derived from the other contracting state, shall be taxable in the other contracting state if the time period between acquisition and alienation does not exceed 1 year (Art. 13(5) of the treaty);
-		the treaty contains a provision regarding independent personal services based on Art. 14 of the UN Model Convention (Art. 14 of the treaty);
-		Art. 17 on income of artistes and sportsmen does not apply if the visit to the other state is entirely or mainly financed from public funds of the other state, a "Land", a political subdivision or a local authority thereof or a recognized charitable organization in the other state (Art. 17(3) of the treaty);
-		Art. 18 does not only apply for pensions but also for annuities and similar remunerations (Art. 18(1) of the treaty;
-		pensions and other similar remuneration or annuities including payments from the statutory social insurance may also be taxed in source state according to the laws of that state. However, the payments amounting to EUR 10,000 (including pension allowance) per year shall be exempted in that state. If the payments exceed that amount, only the exceeding part shall be subject to tax which shall not exceed 10% of the gross amount of the payment (Art. 18(2) of the treaty);
-		remuneration received by a teacher or by an instructor who visits the other contracting state solely for the purpose of teaching, giving lectures or carrying out research for a period not exceeding 2 years shall be exempt from tax, subject to certain conditions (Art. 20(2) of the treaty); and
-		the treaty includes an article on the procedural rules for taxation at source whereby the benefits of the treaty provisions might be applied by way of refund of excessive tax withheld (Art. 27 of the treaty).

Turkey generally provides for the credit method to avoid double taxation. Where, in accordance with any provision of the treaty, income is exempt from tax, Turkey provides for the exemption-with-progression method.

Germany generally provides for the exemption-with-progression method to avoid double taxation. However, dividends shall be exempt only to the extent they are distributed by a Turkish company (not including partnerships) in which a German company holds at least 25% of the capital and the dividends are not deductible in Turkey. The credit method applies, however, to a number of specifically listed types of income (e.g.):

-		dividends that are not exempt;
-		interest;
-		royalties;
-		capital gains on shares of Turkish companies, the assets of which principally consist of immovable property and capital gains from any property other than covered in the article;
-		dependent personal services;
-		director's fees; and
-		income of artistes and sportsmen.

The treaty will enter into force on the day of the exchange of the instruments of ratification and shall have effect from 1 January 2011 (Art. 30 of the treaty):

-		in Turkey:       -   for taxes with respect to every taxable period beginning on or after that date; and -   in respect of the exchange of information and in the assistance in the collection of taxes from that date.
-		in Germany:       -   for taxes withheld at source, in respect of amounts paid on or after that date; -   for other taxes, in respect of taxes levied for periods beginning on or after that date; and -   in respect of the exchange of information and the assistance in the collection of taxes from that date.

Neither contracting state can terminate the treaty during the first 5 years (Art. 31 of the treaty).