PROTOCOL TO THE AGREEMENT BETWEEN THE FEDERAL REPUBLIC OF GERMANY AND THE STATE OF ISRAEL FOR THE AVOIDANCE OF DOUBLE TAXATION AND OF TAX EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL SIGNED ON 21 AUGUST 2014
The Federal Republic of Germany and the State of Israel have in addition to the Agreement of 21 August 2014 for the avoidance of double taxation and of tax evasion with respect to taxes on income and on capital agreed on the following provisions, which shall form an integral part of the said Agreement:
(1) With reference to sub-paragraphs (a) and (b) of paragraph (1) of Article 3 (General Definitions):
For the application of sub-paragraphs (a) and (b) of paragraph (1) of Article 3, the Contracting States agree to exercise sovereign rights and jurisdiction in the territorial sea and contiguous zone, the exclusive economic zone and the continental shelf in conformity with the provisions in Parts II, V and VI of the United Nations Convention on the Law of the Sea of 10 December 1982 irrespective of whether they are a State Party to this Convention or not.
(2) With reference to the term "Land":
The term "Land" means a German State in accordance with the Basic Law for the Federal Republic of Germany.
(3) With reference to Article 7 (Business Profits):
- (a) Where an enterprise of a Contracting State sells goods or merchandise or carries on business in the other Contracting State through a permanent establishment situated therein, the profits of that permanent establishment shall not be determined on the basis of the total amount received therefore by the enterprise but only on the basis of the amount which is attributable to the actual activity of the permanent establishment for such sales or business.
- (b) In the case of contracts, in particular for the survey, supply, installation or construction of industrial, commercial or scientific equipment or premises, or of public works, where the enterprise has a permanent establishment in the other Contracting State, the profits of such permanent establishment shall not be determined on the basis of the total amount of the contract, but only on the basis of that part of the contract which is effectively carried out by the permanent establishment in the Contracting State in which it is situated. Profits derived from the supply of goods to that permanent establishment or profits related to the part of the contract which is carried out in the Contracting State in which the head office of the enterprise is situated shall be taxable only in that State.
(4) With reference to Article 10 (Dividends):
It is understood that the term "dividends" includes also distributions on certificates of an investment fund.
(5) With reference to Articles 10 (Dividends) and 11 (Interest):
Notwithstanding the provisions of Articles 10 and 11 of this Agreement, dividends and interest may be taxed in the Contracting States in which they arise, and according to the law of that State,
- (a) if they are derived from rights or debt-claims carrying a right to participate in profits, including income derived by a silent partner ("stiller Gesellschafter") from his participation as such, or from a loan with an interest rate linked to borrower's profit ("partiarisches Darlehen") or from profit-sharing bonds ("Gewinnobligationen") within the meaning of the tax law of Germany and
- (b) under the condition that they are deductible in the determination of profits of the debtor of such income.
(6) With reference to Article 13 paragraph (6) (Capital Gains):
In the case of diverging taxation according to the domestic law of the Contracting States the competent authorities shall in a mutual agreement procedure regard the fair market value of the property at the time of change of residence as decisive.
(7) With reference to Article 16 paragraph (3) (Artistes and Sportsmen):
It is understood that a charitable organisation is an organisation according to section 51 et seq. of the German Fiscal Code and a not-for-profit institution is an institution according to Article 9(2) of the Israeli Income Tax Ordinance.
(8) With reference to Article 23 (Non-Discrimination):
If an agreement for the avoidance of double taxation or a protocol amending such an agreement is signed after the signature of this Agreement between Israel and a third State and the agreement contains a paragraph identical to paragraph (6) of Article 24 of the 2008 OECD Model Tax Convention on Income and Capital, such paragraph shall automatically apply as if it had been laid down in this Agreement, with effect from the date on which the provisions of the other agreement enter into force or from the date on which this Agreement enters into force, whichever is later.
(9) With reference to Article 25 (Exchange of Information):
- (a) If an agreement for the avoidance of double taxation or a protocol amending such an agreement is signed after the signature of this Agreement between Israel and a third State and the agreement contains a paragraph identical to paragraph (1) of Article 26 of the 2008 OECD Model Tax Convention on Income and Capital, such paragraph shall automatically apply as if it had been laid down in this Agreement, with effect from the date on which the provisions of the other agreement enter into force or from the date on which this Agreement enters into force, whichever is later.
- (b) Insofar as personal data are supplied under Article 25, the following additional provisions shall apply:
- (aa) Notwithstanding the provisions of paragraph (2) of Article 25, the information may be used for other purposes, if under the law of both States it may be used for these other purposes and the competent authority of the supplying State has agreed to this use.
- (bb) The supplying agency shall be obliged to ensure that the data to be supplied are accurate and their foreseeable relevance within the meaning of the first sentence of paragraph (1) of Article 25 and that they are proportionate to the purpose for which they are supplied. Data are foreseeably relevant if in the concrete case at hand there is the serious possibility that the other Contracting State has a right to tax and there is nothing to indicate that the data are already known to the competent authority of the other Contracting State or that the competent authority of the other Contracting State would learn of the taxable object without the information. If it emerges that inaccurate data or data which should not have been supplied have been supplied, the receiving agency shall be informed of this without delay. That agency shall be obliged to correct or erase such data without delay. If data have been supplied spontaneously, the receiving agency shall check without delay whether the data are needed for the purpose for which they were supplied; that agency shall immediately erase any data which is not needed.
- (cc) The receiving agency shall on request inform the supplying agency on a case-by-case basis for the purpose of informing the person concerned about the use of the supplied data and the results achieved thereby.
- (dd) The receiving agency shall inform the person concerned of the data collection by the supplying agency, unless the data were supplied spontaneously. The person concerned need not be informed if and as long as on balance it is considered that the public interest in not informing him outweighs his right to be informed.
- (ee) Upon application the person concerned shall be informed of the supplied data relating to him and of the use to which such data are to be put. The second sentence of sub-paragraph (dd) shall apply accordingly.
- (ff) The receiving agency shall bear liability under its domestic laws in relation to any person suffering unlawful damage in connection with the supply of data under the exchange of data pursuant to this Agreement. In relation to the damaged person, the receiving agency may not plead to its discharge that the damage had been caused by the supplying agency.
- (gg) The supplying and the receiving agencies shall be obliged to keep official records of the supply and receipt of personal data according to their domestic laws.
- (hh) Where the domestic law of the supplying agency contains special provisions for the deletion of the personal data supplied, that agency shall inform the receiving agency accordingly. In any case, supplied personal data shall be erased once they are no longer required for the purpose for which they were supplied.
- (ii) The supplying and the receiving agencies shall be obliged to take effective measures to protect the personal data supplied against unauthorised access, unauthorised alteration and unauthorised disclosure according to their domestic laws.
(10) With reference to taxation at source:
A relief provided under this Agreement to a resident of a Contracting State by the other Contracting State may be conditioned upon the presentation of a certificate of residence issued by the tax authorities of the first-mentioned State.