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ARTICLE 23
[Elimination of Double Taxation]
(1) In the case of residents of the Federal Republic of Germany, double taxation shall be avoided as follows:
- (1) Income arising in Belgium-with the exception of income as specified in item 2 below and in Article 12, paragraphs (5) and (6)-and elements of capital situated in Belgium which, according to the foregoing Articles, may be taxed in that State shall be exempt from taxes in the Federal Republic of Germany. This exemption shall not limit the right of the Federal Republic of Germany to take into account, in determining the rate of its taxes, the income and elements of capital so exempted.
- (2) The tax levied in Belgium in accordance with this Convention:
- (a) On dividends to which the rule laid down in Article 10, paragraph (2), applies, with the exception of income from capital invested in a general partnership or a limited partnership which is a resident of Belgium, and
- (b) On interest to which the rule laid down in Article 11, paragraph (2), applies shall be allowed as a deduction from the tax on the same income levied in the Federal Republic of Germany. Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given, which is proportionate to the income which may be taxed in Belgium.
- (3) Notwithstanding item 2(a), dividends of a company limited by shares being a resident of Belgium which are received by a joint stock company, being a resident of the Federal Republic of Germany and holding at least 25 per cent of the voting stock or voting shares of the first-mentioned company, shall be subject to the rule laid down in item 1, provided that not more than 20 per cent of the profits of the first-mentioned company is composed of gross dividends, less foreign tax, arising in third States.
For the purposes of the preceding sub-paragraph, dividends which, by virtue of an agreement between the Federal Republic of Germany and a third State for the avoidance of double taxation, would be exempt from taxes in the Federal Republic of Germany if they had been paid under the same conditions directly to the joint stock company being a resident of the Federal Republic of Germany shall not be deemed to be dividends arising in a third State.
The aforementioned stock or shares of a company being a resident of Belgium shall, under the same conditions, be exempt from the tax on capital levied in the Federal Republic of Germany.
(2) In the case of residents of Belgium, double taxation shall be avoided as follows:
- (1) Income arising in the Federal Republic of Germany-with the exception of income as specified in items 2 and 3-and elements of capital situated in the Federal Republic of Germany which, according to the foregoing Articles, may be taxed in that State shall be exempt from taxes in Belgium. Except in the case of income as specified in Article 19, paragraph (4), this exemption shall not limit the right of Belgium to take into account, in determining the rate of its taxes, the income and elements of capital so exempted.
- (2) In the case of dividends to which the rule laid down in Article 10, paragraph (2) or (3), applies, in the case of interest to which the rule laid down in Article 11, paragraph (2) or (7), applies and in the case of excess amounts of royalties as specified in Article 12, paragraph (5) or (6), the fixed quota of foreign tax provided for under Belgian law shall be allowed as a deduction, under the conditions laid down by the said law, from the tax on individuals in respect of dividends or from the tax on individuals or the company tax in respect of such interest or excess amounts of royalties as may be taxed in the Federal Republic of Germany in accordance with German law and with Article 11, paragraph (2) or (7), or Article 12, paragraph (5) or (6).
(3)
- (a) Where a company which is a resident of Belgium owns stock or shares in a joint stock company which is a resident of the Federal Republic of Germany, dividends paid by the last-mentioned company to the first-mentioned company which are subject to the rule laid down in Article 10, paragraph (2) or (3), shall be exempt from the company tax in Belgium, to the extent that exemption would be granted if both companies were residents of Belgium; this provision shall not preclude the levying, in respect of such dividends, of the movable property tax collected in advance (précompte mobilier) payable under Belgian law, but the said dividends-with the exception of distributions upon liquidation and bonus shares-shall be exempt, to the same extent, from the said tax collected in advance at the time when they are passed on to the shareholders of the company which is a resident of Belgium.
- (b) Where stock or shares in a joint stock company which is a resident of the Federal Republic of Germany and which is liable to the corporation tax in that State have been held throughout the said company's financial year by a company which is a resident of Belgium as sole owner, the last-mentioned company may also be exempted from the movable property tax collected in advance payable under Belgian law in respect of dividends on the said stock or shares, provided that it makes written application for such exemption within the prescribed time for the submission of its annual tax return; in such a case, the dividends so exempted may not, when they are passed on to the shareholders of the last-mentioned company, be deducted from the distributed dividends which are subject to the movable property tax collected in advance. This provision shall not apply if the Belgian company has formally elected to have its profits subjected to the tax on individuals.