The amending protocol to the 2011 income and capital tax treaty between Germany and Ireland entered into force on 30 December 2021. The protocol, signed 19 January 2021, is the second to amend the treaty and includes the following changes:

• The preamble is replaced in line with OECD BEPS standards;
• Article 5 (Permanent Establishment) is amended with the addition of paragraph 4.1, which provides that, subject to certain conditions, paragraph 4 (general exceptions for activities not resulting in a permanent establishment) does not apply to a fixed place of business that is used or maintained by an enterprise if the same enterprise or a closely related enterprise carries on business activities at the same place or at another place in the same Contracting State, and:
  • that place or other place constitutes a permanent establishment for the enterprise or the closely related enterprise under the provisions of this Article; or
  • the overall activity resulting from the combination of the activities carried on by the two enterprises at the same place, or by the same enterprise or closely related enterprises at the two places, is not of a preparatory or auxiliary character;
• Sub-paragraph a) of paragraph 2 of Article 10 (Dividends) is replaced to include the added condition that to benefit from the 5% withholding tax rate, at least 10% of the paying company's capital must be held throughout a 365-day period that includes the day of the payment of the dividend;
• Paragraph 4 of Article 13 (Capital Gains) is replaced to provide that gains derived by a resident of a Contracting State from the alienation of shares (other than shares quoted on a stock exchange) or comparable interests, such as interests in a partnership or trust, may be taxed in the other Contracting State if, at any time during the 365 days preceding the alienation, these shares or comparable interests derived more than 50% of their value directly or indirectly from immovable property situated in the other State;
• A new Article 29A (Prevention of Treaty Abuse) is added, which provides that a benefit under the treaty shall not be granted in respect of an item of income or capital if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of the treaty; and
• Paragraph 8 of the protocol to the treaty is deleted, which concerns the exchange and use of personal data.

The protocol applies from 1 January 2022.