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Germany for the Avoidance of Double Taxation with Respect to Taxes on Income

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Germany for the Avoidance of Double Taxation with Respect to Taxes on Income Proclamations by the State President of the Republic of South Africa No. R. 125, 1973 INCOME TAX ACT, 1962 AGREEMENT BETWEEN THE REPUBLIC OF SOUTH AFRICA AND THE FEDERAL REPUBLIC OF GERMANY FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME In terms of section 108(2) of the Income Tax Act, 1962 (Act 58 of 1962), I do hereby declare that the Agreement set out in the Schedule to this Proclamation has, under section 108(1) of the said Act, been entered into between the Republic of South Africa and the Federal Republic of Germany for the avoidance of double taxation with respect to taxes on income. Given under my Hand and the Seal of the Republic of South Africa at Cape Town on this First day of May, One thousand Nine hundred and Seventy-three. J.J. FOUCHÉ, State President. By Order of the State President-in-Council. N. DIEDERICHS. In terms of the provisions of paragraph 2 of Article 25, the date of entry into force of the Agreement is 28 February 1975. The Agreement was published in Government Gazette No 3898 dated 25 May 1973. SCHEDULE 2 AGREEMENT BETWEEN THE REPUBLIC OF SOUTH AFRICA AND THE FEDERAL REPUBLIC OF GERMANY FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME THE REPUBLIC OF SOUTH AFRICA and THE FEDERAL REPUBLIC OF GERMANY Desiring to conclude an Agreement for the avoidance of double taxation with respect to taxes on income, Have agreed as follows: Article 1 This Agreement shall apply to persons who are residents of one or both Contracting States. Article 2 (1) This Agreement shall apply to taxes on income imposed on behalf of each Contracting State or of its Länder, political subdivisions or local authorities, irrespective of the manner in which they are levied. (2) There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation. (3) The existing taxes to which this Agreement shall apply are, in particular: (a) in the Republic of South Africa: the normal tax; the undistributed profits tax; the non-resident shareholders' tax; the non-resident tax on interest; the provincial income tax; and all other taxes on persons or on the incomes of persons which are chargeable in South Africa; (hereinafter referred to as “South African tax”); (b) in the Federal Republic of Germany: die Einkommensteuer (the income tax); die Körperschaftsteuer (the corporation tax); and die Gewerbesteuer (the trade tax); (hereinafter referred to as “German tax”). (4) This Agreement shall also apply to any identical or substantially similar taxes which are subsequently imposed in addition to, or in place of the existing taxes. 3 (5) The provisions of this Agreement in respect of the taxation of income shall likewise apply to the German Gewerbesteuer (trade tax) computed on a basis other than income. Article 3 (1) In this Agreement, unless the context otherwise requires: (a) the term “South Africa” means the Republic of South Africa and, when used in a geographical sense, includes that area of the high seas designated, in accordance with international law as related to the rights which South Africa may exercise with respect to the sea bed and sub-soil and their natural resources, as domestic area for tax purposes; (b) the term “Federal Republic” means the Federal Republic of Germany and, when used in a geographical sense, means the territory in which the Basic Law for the Federal Republic of Germany is in force, as well as any area adjacent to the territorial waters of the Federal Republic of Germany designated, in accordance with international law as related to the rights which the Federal Republic may exercise with respect to the sea bed and sub-soil and their natural resources, as domestic area for tax purposes; (c) the terms “a Contracting State” and “the other Contracting State” mean South Africa or the Federal Republic, as the context requires; (d) the term “tax” means South African tax or German tax, as the context requires; (e) the term “person” includes any body of persons, corporate or not corporate; (f) the term “company” means any body corporate and any entity which is treated as a body corporate for tax purposes; (g) (aa) the term “resident of South Africa” means any person (other than a company) who is ordinarily resident in South Africa for the purposes of South African tax and any company which is incorporated, managed or controlled in South Africa; (bb) the term “resident of the Federal Republic” means any person who is resident in the Federal Republic (subject to unlimited tax liability) for the purposes of German tax; (cc) where by reason of the provisions of subparagraphs (aa) and (bb) an individual is a resident of both Contracting States, then this case shall be determined in accordance with the following rules: (i) He shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closest (centre of vital interests); (ii) if the Contracting State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either Contracting State he shall be deemed to be a resident of the Contracting State in which he has an habitual abode; (iii) if he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a national; 4 (iv) if he is a national of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement; (dd) where by reason of the provisions of subparagraphs (aa) and (bb) a legal person is a resident of both Contracting States, then it shall be deemed to be a resident of the Contracting State in which its place of effective management is situated. The same provision shall apply to partnerships and associations which under the national laws by which they are governed are not legal persons; (h) the terms “resident of a Contracting State” and “resident of the other Contracting State” mean a person who is a resident of South Africa or a person who is a resident of the Federal Republic, as the context requires; (i) the terms “South African enterprise” and “Federal Republic enterprise” mean respectively an industrial or commercial enterprise or undertaking carried on by a resident of South Africa and an indus-trial or commercial enterprise or undertaking carried on by a resident of the Federal Republic, and the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean a South African enterprise or a Federal Republic enterprise, as the context requires; (j) (aa) the term “permanent establishment” means a fixed place of business in which the business of the enterprise is wholly or partly carried on; (bb) a permanent establishment shall include especially: a place of management; a branch; an office; a factory; a workshop; a mine, quarry or other place of extraction of natural resources; a building site or construction or assembly project which exists for more than 12 months; (cc) the term “permanent establishment” shall not be deemed to include: The use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise; the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise; (dd) a person acting in a Contracting State on behalf of an enterprise of the other Contracting State - other than an agent of an independent 5 status to whom subparagraph (ee) applies - shall be deemed to be a permanent establishment in the first-mentioned State if he has, and habitually exercises in that State, an authority to conclude contracts in the name of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise; (ee) an enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, where any such person is acting in the ordinary course of his business; (ff) the fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other; (k) the term “nationals” means: (aa) in the case of the Federal Republic: all Germans in the meaning of Article 116(1) of the Basic Law for the Federal Republic of Germany and all legal persons, partnerships and associations deriving their status as such from the law in force in the Federal Republic; (bb) in the case of South Africa: all South African citizens and all legal persons, partnerships and associations deriving their status as such from the law in force in South Africa; (l) the term “competent authorities” means the Secretary for Inland Revenue in the case of South Africa and the Federal Minister of Finance, in the case of the Federal Republic.
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