ARTICLE 23

Elimination of Double Taxation

(1) For residents of Algeria, the tax shall be determined as follows:

• (a) Where a resident of Algeria derives income or owns capital which, in accordance with the provisions of this Convention may be taxed in the Federal Republic of Germany, Algeria shall grant:
  • (aa) on the tax it levies on the income of that resident, a deduction of an amount equal to the income tax paid in the Federal Republic of Germany;
  • (bb) on the tax it levies on capital of such a resident, a deduction of an amount equal to the capital tax paid in the Federal Republic of Germany.
• However, in either case, the deduction may not exceed that portion of the income tax or capital tax, calculated prior to the deduction, corresponding as the case may be, to the taxable income or capital in the Federal Republic of Germany.
• (b) Where, in accordance with any provision of this Convention, income derived by a resident of Algeria or capital owned by him or her is exempt from tax in Algeria, then, Algeria may nevertheless, in calculating the amount of tax on the remaining income or capital of such a resident, take into account the exempted income or capital.

(2) For residents of the Federal Republic of Germany, the tax shall be determined as follows:

• (a) Income arising from Algeria and items of capital situated in Algeria that are taxable in Algeria by virtue of this Convention and are not dealt with in sub-paragraph (b) of paragraph (1) of this Article are to be excluded from the German tax assessment base.
• Insofar as income from dividends is concerned, the provisions mentioned above shall apply only when such dividends are paid to a company (other than a partnership) being a resident of the Federal Republic of Germany by a company being a resident of Algeria, of which at least 10 percent of the capital is held directly by the German company and which (i.e. the dividends) were not deducted for determining the profits of the company making the distribution.
• For the purposes of taxation of capital, the shareholdings whose dividends, in case of distribution, would be excluded from the tax assessment base under terms of the preceding sentences are also to be excluded from the German tax assessment base.
• (b) The Algerian tax paid in accordance with Algerian laws and in accordance with the provisions of this Convention, on the income mentioned below, shall be deducted from the German income tax, subject to the provisions of the German fiscal laws concerning imputation of foreign tax:
  • (aa) dividends that are not addressed in sub-paragraph (a);
  • (bb) interest;
  • (cc) royalties;
  • (dd) income that is taxed in Algeria in accordance with paragraph (2) of Article 13;
  • (ee) income that is taxed in Algeria in accordance with paragraph (3) of Article 15;
  • (ff) royalties;
  • (gg) income referred to in Article 17 of the Convention.
• (c) The provisions of sub-paragraph (b) shall apply instead of the provisions of sub-paragraph (a) to income as defined in Articles 7 and 10 of the Convention, and to the items of capital from which such income is derived if the resident of the Federal Republic of Germany does not prove that the gross income of the permanent establishment in the financial year in which the profit has been realized or of the company resident in Algeria in the financial year for which the dividends were paid was derived exclusively or almost exclusively from activities within the meaning of points 1 to 6 of paragraph (1) of Article 8 of the German Law on External Tax Relations; the same shall apply to immovable property used by a permanent establishment and to income from this immovable property of the permanent establishment (paragraph (4) of Article 6) and to profits from the alienation of such immovable property (paragraph (1) of Article 13) and of the movable property forming part of the business property of the permanent establishment (paragraph (3) of Article 13).
• (d) The Federal Republic of Germany, however, shall retain the right to take into account in the determination of its rate of tax, the income and items of capital, which are, under the provisions of this Convention, exempted from German tax.
• (e) Notwithstanding the provisions of sub-paragraph (a), double taxation shall be avoided by imputation/deduction of tax as provided in sub-paragraph (b):
  • (aa) if in the Contracting States, income or items of capital are placed under different provisions of this Convention or attributed to different persons (except pursuant to Article 9) and this divergence/conflict cannot be settled by a procedure in accordance with paragraph (3) of Article 25 and if as a result of this difference in placement or attribution, the relevant income or items of capital would remain untaxed or is taxed lower than without this divergence/conflict; or
  • (bb) if after due consultation (with the competent authority of Algeria), the Federal Republic of Germany notifies Algeria through diplomatic channels of other income to which it intends to apply the method of imputation referred to in sub-paragraph (b). In such cases, double Taxation is avoided for the notified income through imputation of the tax from the first day of the calendar year which follows the year in which the notification was made.