ARTICLE 18

Pensions, Annuities and Similar Payments

(1) Periodic or non-periodic pensions and other similar allowances derived by a resident of a Contracting State shall be taxable only in that State. However, such pensions and allowances may also be taxed in the other Contracting State if:

• (a) they are derived from sources in that other Contracting State;
• (b) contributions to the pension fund or plan were deductible for the purposes of taxation in that other State or if the pension was funded by that other State, a "Land", a political subdivision, a local authority or a governmental instrumentality thereof; and
• (c) they are not paid in respect of services rendered or activities exercised outside that other State by a person when this person was not a resident of that other State.

(2) Annuities derived by a resident of a Contracting State shall be taxable only in that State unless they are derived from sources within the other Contracting State. If they are so derived, such annuities may be taxed in that other State. The term "annuities" means stated sums payable periodically at stated times, during life or during a specified or ascertainable period of time, under an obligation to make the payments in return for adequate and full consideration in money or money's worth but does not include any annuity the cost of which was deductible for the purposes of taxation in the Contracting State in which it was acquired.

(3) Notwithstanding any provision in this Agreement:

• (a) war pensions and allowances (including pensions and allowances paid to war veterans or paid as a consequence of damages or injuries suffered as a consequence of war) received from Canada and paid to a resident of the Federal Republic of Germany shall be taxable only in Canada;
• (b) periodic or non-periodic payments received by a resident of Canada from the Federal Republic of Germany, or a "Land" or a governmental instrumentality thereof as compensation for an injury or damage sustained as a result of hostilities or past political persecution shall be taxable only in the Federal Republic of Germany;
• (c) benefits under the social security legislation in a Contracting State paid to a resident of the other Contracting State may be taxed in that other State, but the amount of any such benefits that would be excluded from taxable income in the first-mentioned State if the recipient were a resident thereof shall be exempt from taxation in that other State;
• (d) alimony or similar allowances arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in that other State.