ARTICLE 24

Elimination of Double Taxation

(1) In the case of the residents of the Federal Republic of Germany, double taxation shall be avoided in the following way:

• (a) Income derived from Iran - with the exception of income described in sub-paragraphs (b) to (d)-and the elements of the capital located in Iran, which are taxable in this State under the terms of the preceding Articles, shall be exempt from German tax. This rule does not limit the right of the Federal Republic of Germany to take into consideration, at the time of the determination of the rate of its taxes, the income and elements of capital thus exempted. In the case of the dividends, only the first sentence solely applies, when the dividends are paid by a joint stock enterprise resident of Iran to a joint stock enterprise (Kapitalgesellschaft) resident of the Federal Republic of Germany, which holds at least twenty-five percent of the capital together with voting rights of the first enterprise. The stock or shares of the enterprise resident of Iran shall, under the same conditions, be exempted from the capital tax imposed in the Federal Republic of Germany.
• (b) There shall be charged to the German tax related to the following income which arises from Iran, the Iranian tax imposed in accordance with the provisions of the preceding Articles on:
  • (i) dividends not mentioned with the sub-paragraph (a);
  • (ii) interests;
  • (iii) royalties;
  • (iv) remunerations and pensions mentioned in paragraph (1) of Article 19 which, according to this provision, shall not be exempted from the German tax.
• The amount to be charged may not exceed that part of the German tax, as computed before charging, which is appropriate to the income derived from Iran.
• (c) However, if the dividends or royalties mentioned within sub-paragraph (b) are exempted from the Iranian tax, or imposed in Iran on a reduced rate, under the terms of special measures provided by the Iranian laws in order to encourage the development of the Iranian economy, shall be charged to the German tax on such dividends or royalties, the Iranian tax which would be payable in the absence of these special measures, and where specified that the amount thus attributable shall not exceed the amount which can be withheld as Iranian tax according to the provisions of sub-paragraph (b) of paragraph (2) of Article 10 or paragraph (2) of Article 12 respectively. The competent authorities of the Contracting States shall agree according to Article 26 to determine what provisions of Iranian law provide for special measures in the sense of the foregoing provision.
• (d) The provisions of sub-paragraph (a) shall not apply to the dividends distributed by an enterprise, if the incomes of the aforementioned enterprise are not derived exclusively or almost exclusively from the production or the sale from goods or merchandise, hiring or leasing, provisions of services or banking operations or insurance, or interests or dividends derived from Iran, provided that-in the case of dividends distributed by one or more companies that are residents of Iran of which more than twenty-five percent of the capital are held by the first enterprise-the income of the second enterprise come exclusively or almost exclusively from the activities mentioned above.
• In such case, the Iranian tax on the dividends is charged to the German tax, according to the provisions of sub-paragraph (b).

(2) With regard to the residents of Iran, double taxation is avoided in the following way:

• Tax imposed in the Federal Republic of Germany in accordance with the provisions of this Convention on the income arising from the Federal Republic of Germany, including the remunerations and pensions cited in paragraph (1) of Article 19 which, according to this provision, are not exempted from the Iranian tax, is charged to the Iranian tax related with this same income. The chargeable amount cannot exceed that part of the Iranian tax, calculated before the charge, which corresponds to the income arising from the Federal Republic of Germany.