ARTICLE 23

Elimination of Double Taxation in the State of Residency

(1) For a resident of the Federal Republic of Germany, double taxation shall be avoided in the following manner:

• (a) Income derived in the Republic of Belarus and capital situated therein, which in accordance with the provisions of this Convention may be taxed in that State, shall be exempt from German tax unless the tax credit in accordance with paragraph (b) is carried out. However, the Federal Republic of Germany, reserves the right to include such exempted income and capital for the purpose of determining the tax rate for other income and capital. Insofar as income from dividends is concerned, the above provisions shall only apply in case where such dividends are paid to a company which is a resident of the Federal Republic of Germany (except for a partnership) by a company which is a resident of Belarus, and in which at least ten percent of its capital is directly owned by the German company and such dividends have not been deducted in determining the profits of the company paying the dividends.
• Holdings shall be exempt from taxes on capital when their dividends, if any, are paid or have been paid, or are to be exempted or have been exempted, in accordance with the preceding sentence.
• (b) Taking into account the provisions of the German Taxation Law on apportionment of foreign taxes, and the Belarusian taxes paid under the law of Belarus and in agreement with this Convention, the German taxes on income shall be paid for the following income:
  • (i) Dividends to which paragraph (a) does not apply;
  • (ii) Interest;
  • (iii) Royalties;
  • (iv) Income that is taxable in the Republic of Belarus under the provisions of paragraph (2) of Article 13;
  • (v) Income that is taxable in the Republic of Belarus under the provisions of paragraph (4) of Article 15;
  • (vi) Directors' fees; and
  • (vii) Income of artistes and athletes.
• (c) Notwithstanding the provisions of paragraph (a) above, in case an individual residing in the Federal Republic of Germany fails to provide proof that the permanent establishment, during the business year in which the gain was realized, or in the case of a company that is a resident of the Republic of Belarus, during the year in which the distribution was made, derives its gross earnings wholly or almost wholly from activities included in Section 8, paragraph (1), Numbers 1 through 6 of the German Foreign Tax Law, then the provisions of paragraph (b) shall apply to income referred to in Article 7 and Article 10, as well as to property from which such income is derived. The same applies to immovable property pertaining to a permanent establishment (paragraph (4) of Article 6) as well as profits resulting from the alienation of such immovable property (paragraph (1) of Article 13) and movable property representing the operating assets of the permanent establishment (paragraph (2) of Article 13).
• (d) In case a company that is a resident of the Federal Republic of Germany uses income originating from sources located within the Republic of Belarus for the purpose of distributing dividends, paragraph (a) does not preclude the application of the distribution as per the provisions of German Tax Law.
• (e) Notwithstanding the provisions of paragraph (a), double taxation shall be avoided by deducting taxes according to paragraph (b):
  • (i) if income or property in the Contracting States are subject to different provisions of this Convention or allocated to different individuals (except as described in Article 9) and such conflict cannot be settled through a procedure as described in paragraph (3) of Article 25 and because of such different allocation or apportionment, the respective income or capital would not be taxed at all or taxed too low, or
  • (ii) if a Contracting State notifies the other Contracting State of its intention to apply this paragraph to other types of income through diplomatic channels, then the notification shall enter into force and effect only on the first day of the calendar year following the year during which the notification was transmitted and all legal requirements in accordance with the domestic laws of the notifying State have been fulfilled for the notification to enter into force and effect.

(2) Where a resident of Belarus derives income or owns capital which in accordance with the provisions of this Convention, may be taxed in the Federal Republic of Germany, then Belarus shall allow:

• (a) As a deduction from the income tax of that resident, an amount equal to the income tax paid in Germany;
• (b) As a deduction from the tax on capital of that resident, an amount equal to the tax on capital paid in Germany.

Such deduction in either case must not exceed that portion of tax on income or on capital, calculated prior to the deduction, corresponding, as the case may be, to the income or capital that is subject to tax in Germany.