ARTICLE 24

Relief from 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 tax is imposed, any item of income arising in the Arab Republic of Egypt and any item of capital situated within the Arab Republic of Egypt, which, according to this Agreement, may be taxed in the Arab Republic of Egypt. The Federal Republic of Germany, however, retains the right to take into account in the determination of its rate of tax the items of income and capital so excluded.
• As for dividends the foregoing provisions shall apply only to dividends which are paid to a company being a resident of the Federal Republic of Germany by a company being a resident of the Arab Republic of Egypt if at least 10 per cent of the capital of the Egyptian company is owned directly by the German company.
• For the purposes of taxes on capital there shall also be excluded from the basis upon which German tax is imposed any participation, the dividends of which are excluded or, if paid, would be excluded, according to the immediately foregoing sentence from the basis upon which German tax is imposed.
• (b) Egyptian tax paid under the laws of the Arab Republic of Egypt and in accordance with this Agreement on:
  • (aa) dividends, not dealt with in sub-paragraph (a),
  • (bb) interest in the meaning of Article 11 and interest paid on debts secured by mortgage on real estate,
  • (cc) royalties in the meaning of Article 12,
  • (dd) capital gains to which paragraph (4) of Article 13 applies,
  • (ee) remuneration to which Article 16 applies,
  • (ff) income to which Article 17 applies,
  • (gg) income to which paragraph (2) of Article 22 applies,
• shall, subject to the provisions of German tax law regarding credit for foreign tax, be allowed as a credit against German income or corporation tax payable on such items of income.
• (c) For the purposes of credit referred to in sub-paragraph (b) Egyptian tax on dividends and interest paid by a resident of the Arab Republic of Egypt shall be deemed to include any amount which would have been payable as Egyptian tax under the laws of the Arab Republic of Egypt and in accordance with this Agreement for any year but for an exemption from, or reduction of, tax granted for that year or any part thereof under:
  • (aa) Law No. 43 of 1974 amended by the law No. 32 of 1977 concerning Arab and Foreign Capital Investment and Free Zones so far as it was in force on, and has not been modified since, the date of signature of this Agreement, or has been modified only in minor respects so as not to affect its general character; and except to the extent that any of the said provisions has the effect of exempting or relieving a source of income for a period in excess of ten years; or
  • (bb) any other provision which may subsequently be made granting an exemption or reduction of tax which is agreed by the competent authorities of the Contracting States to be of a substantially similar character, if it has not been modified since or has been modified only in minor aspects so as not to affect its general character.
• (d) The provisions of sub-paragraph (a) shall not apply to the profits of, and to the capital represented by property forming part of the business property of, a permanent establishment; to dividends paid by, and to the shareholding in, a company; or to gains referred to in paragraphs (1) and (2) of Article 13 of the Agreement; provided that the resident of the Federal Republic of Germany concerned does not prove that the receipts of the permanent establishment or company are derived exclusively or almost exclusively:
  • (aa) from producing or selling goods and merchandise, giving technical advice or rendering engineering services, or doing banking or insurance business, within the Arab Republic of Egypt, or
  • (bb) from dividends paid by one or more companies resident in the Arab Republic of Egypt more than 25 per cent of the capital of which is owned by the first-mentioned company, which themselves derived their receipts exclusively or almost exclusively from producing or selling goods or merchandise, giving technical advice or rendering engineering services, or doing banking or insurance business, within the Arab Republic of Egypt.

In such a case Egyptian tax paid under the laws of the Arab Republic of Egypt and in accordance with this Agreement on the above-mentioned items of income and capital shall, subject to the provisions of German tax law regarding credit for foreign tax, be allowed as a credit against German income or corporation tax payable on such items of income or against German capital tax payable on such items of capital.

(2) Tax shall be determined in the case of a resident of the Arab Republic of Egypt as follows:

• There shall be excluded from the basis upon which Egyptian tax is imposed any item of income arising in the Federal Republic of Germany and any item of capital situated within the Federal Republic of Germany, which, according to this Agreement, may be taxed in the Federal Republic of Germany. The Arab Republic of Egypt, however, retains the right to take into account in the determination of its rate of tax the items of income and capital so excluded. The preceding provisions of this paragraph shall not apply to:
  • (a) dividends,
  • (b) interest,
  • (c) royalties,
  • (d) capital gains to which paragraph (4) of Article 13 applies, and
  • (e) income to which paragraph (2) of Article 22 applies;
• the German tax levied on this income shall, however, be allowed as credit against the Egyptian tax payable in respect of such income computed on the basis of an average rate of tax.