ARTICLE 24

Avoidance of Double Taxation

(1) Tax shall be determined in the case of a resident of the Federal Republic of Germany as follows:

• *(a) Unless the provisions of sub-paragraph (b) apply, there shall be excluded from the basis upon which German income tax is imposed any item of income arising in Denmark and possesses property situated in Denmark which, in accordance with this Convention, may be taxed in Denmark.
• The aforementioned provisions shall apply to dividends only if the dividends are paid to a company resident in the Federal Republic of Germany by a company resident in Denmark but at least 10 per cent of the capital of which is directly owned by the German company.
• For the purposes of tax on capital, there shall be excluded from the basis upon which German tax on capital is imposed holdings of equity capital, if any dividends on such capital would be excluded from the tax evaluation basis in accordance with the aforementioned sentence.
• (b) Subject to the provisions of German tax law regarding credit for foreign taxes, there shall be allowed as a credit against German income tax Danish tax paid in pursuance of legal provisions and in accordance with this Convention on the following items of income:
  • (aa) Dividends not dealt with in sub-paragraph (a);
  • (bb) income which may be taxed in Denmark according to Article 13 paragraph (1) sentence 2, Article 15 paragraphs (4), (16), and (17), and Article 18 paragraphs (4) and (23);
• *(c) The Federal Republic of Germany retains the right to take into account in the determination of its rate of tax the items of income and capital which are under the provisions of this Convention exempted from German tax.

(2) Double taxation in Denmark shall be avoided:

• (a) Save as provided in sub-paragraph (f), in cases where a resident of Denmark derives income or holds capital which may be taxed in the Federal Republic of Germany in pursuance of this Convention, Denmark shall permit:
  • (aa) The deduction from that person's income tax of an amount equivalent to the amount of income tax paid in the Federal Republic of Germany (including any municipal trade earnings tax)(Gewerbeertragsteuer);
  • (bb) The deduction from the person's tax on capital of an amount equivalent to the capital tax paid in the Federal Republic of Germany (including any municipal capital tax)(Gewerbekapitalsteuer).
• (b) Such deduction shall not, however, exceed that part of the income tax or capital tax, as computed before the deduction is given, which is attributable, as the case may be, to the income or capital which may be taxed in the Federal Republic of Germany.
• (c) Save as provided in sub-paragraph (d), dividends paid by a company resident in the Federal Republic of Germany to a company resident in Denmark which directly or indirectly owns 10 per cent of the capital of the company paying the dividend, shall be exempt from Danish tax.
• (d) Sub-paragraph (c) shall apply only in so far as:
  • (aa) The profit out of which the dividends are paid is subject to general corporation tax in the Federal Republic of Germany or to a tax in the Federal Republic of Germany or in another State, which is comparable to the Danish tax thereon;
  • (bb) The dividends paid by a company resident in the Federal Republic of Germany are dividends on holdings or other rights in a company resident in a third State, which would be exempt from Danish taxation, if the holdings or rights were directly held by a company resident in Denmark.
• (e) If in the case of dividends paid by a company resident in the Federal Republic of Germany to a company resident in Denmark which directly or indirectly owns at least 10 per cent of the capital of the company paying the dividends, the dividends are not exempt from Danish taxation under sub-paragraph (c), there shall be credited the German tax (including that portion of the municipal trade tax due on the amount earned) which must be paid by the company paying the dividends on the profit from which the dividends are paid.
• (f) If a resident of Denmark derives income or possesses property which under this Convention may be taxed only in the Federal Republic of Germany, or which may be taxed there under Article 15, paragraphs (1) and (3), Denmark may include such income or property in the basis upon which tax is calculated but shall however permit the deduction from income tax or capital tax of the portion of income tax or tax on capital due on income from the Federal Republic of Germany or the property situated therein.
• (g) Sub-paragraph (f) shall apply to income which may be taxed in the Federal Republic of Germany under Article 15, paragraphs (1) and (3), only if the competent authorities in Denmark are presented with documents showing that arrangements have been made to pay the German tax on such income.

(3) For the purposes of this Article, profits and income of a resident of a Contracting State shall be deemed to be sources from within the other Contracting State, if they are taxed in that other Contracting State in pursuance of this Convention.